If you were looking for additional evidence to support the notion that the US labor market is woefully out of balance, you got it on Tuesday.
Job openings jumped to 9.286 million in April, an almost unfathomable print that made a mockery of consensus (8.2 million).
In addition to representing a one million+ upside surprise, the headline JOLTS number was a record. And, as the simple figure (below) shows, the word “record” seems somehow inadequate.
The gap (with hires) exceeded 3 million in April.
This is about as amenable to the prevailing narrative as data gets. As Bloomberg’s Cameron Crise quipped, “The ‘pandemic benefits are depressing employment’ thesis got another, err, bump this morning.”
Obviously, this suggests labor demand isn’t the problem. We have ourselves a bonafide imbalance. Job openings in accommodation and food services jumped by a record to a record (figure below).
Indeed, the report is chock-full of records. It’s probably easier to list what didn’t register an all-time high than to catalogue what did.
The data compliments the color that accompanied the NFIB small business report, which described an acute labor shortage. The quit rate in April was the highest ever, at 2.7% (figure below). For leisure and hospitality, the figure was 5.3%.
You can spin this a number of ways. The easy way out is just to say that enhanced unemployment benefits are creating an enormous disparity with open positions. And that’s clearly a semblance of true.
On the bright side, as Bloomberg’s Crise put it Tuesday, it also “suggests the official payroll data substantially underestimates the underlying strength of the labor market, though it will still be some time before that gap closes.”
That, in turn, could give the Fed additional cover when it comes to dragging out the policy normalization discussion, although I’m not sure the optics are great when it comes to citing a record quit rate in explaining labor market slack.