US job openings rose 16,000 to 9.21 million at the end of May, the BLS said Wednesday.
That was below expectations. The market expected 9.33 million.
JOLTS is marquee data in the current environment with traders, investors and policymakers struggling to refine their narratives as the economy emerges from the worst public health crisis in a century. The surge in job openings and attendant record disconnect between vacancies and hires (figure below) is the stuff headlines are made of.
The US labor market is so distorted that it’s difficult to perceive the month-to-month change in the visual. Suffice to say we’re still staring at a funhouse mirror.
That openings remain elevated (essentially unchanged from the prior month) is indicative of persistent labor market frictions. The quit rate fell to 2.5%, but remained historically high, while the layoffs and discharges rate hit a record low (figure below).
The number (and rate) of hires was essentially unchanged.
More than 3.6 million people quit a job in May (figure below). That’s down from April, but still close to a record.
By now, I assume most market participants are well apprised of the narrative. Employers continue to bemoan an acute shortage of labor which, in some industries, is preventing operations from returning to normal. For example, the anecdotes accompanying the June vintage of ISM services included the following bit from someone in Accommodation & Food Services: “Some locations cannot open for business or have limited hours, as we cannot staff the restaurant to meet consumer demand.”
The concerns are myriad. Most obviously, employers are worried about margins. Input costs are rising sharply and when you add the necessity of offering incentives, bonuses and higher wages in order to coax workers from the sidelines, you’re left with concerns about the bottom line.
More broadly, some (ok, many) worry a wage-price spiral may be imminent. For market participants, that could mean faster Fed tightening and everything that goes along with it.
“There are two possible readings,” Bloomberg’s Kriti Gupta said Wednesday. “The first is that unfilled job openings mean the Fed can keep deferring taper talk, which would be risk-positive.” On the other hand, the ongoing disconnect between vacancies and hires could eventually be inflationary, which could accelerate the taper and bring forward liftoff. That would be risk-negative.
This debate won’t be settled anytime soon. “Cleaner” reads on the situation won’t be available until September, at the earliest. As it stands, there’s still quite a bit of sand in the gears of the US labor market.
