There were 11.263 million job openings in the US economy on the last business day of January, closely-watched government data out Wednesday showed.
That was more than expected, and the second most in history. Economists were looking for 10.95 million on the headline JOLTS print.
The figures suggest openings barely budged from the end of December. The data included annual revisions.
Hires were little changed, at 6.5 million. That left the gap loitering near the widest ever (figure above).
Quits “edged down” (BLS’s words) to 4.3 million. Needless to say, that’s still very elevated. Indeed, it would be wholly anomalous outside of the pandemic context. January’s level was (basically) tied for the third-highest on record, even as it was the least in three months.
The quits rate also fell, but again, we’re still in uncharted territory — figuratively and, because I make charts, literally. At 2.8, the quits rate was the highest of any month in history outside of the COVID era (figure above).
Openings in leisure and hospitality fell sharply in January, all the way to — wait for it — the third highest on record, below only December (Omicron) and August (Delta).
The figure (below) speaks for itself. The services industry is desperate for workers, and that means paying up to get them.
865,000 people quit a leisure and hospitality job in January, the same number who quit in December. The picture was largely the same for accommodation and food services, which is hardly surprising.
Ultimately, there was (very) little evidence in the data to suggest the so-called “Great Resignation” is abating. The boilerplate copy is the same month in and month out.
It’s possible that soaring inflation may coax Americans off the sidelines. “With consumer prices forecast to rise nearly 8%, many can no longer afford to go without a paycheck,” Bloomberg wrote Wednesday.
The tragic irony, of course, is that with CPI running near 8% and average hourly earnings for production and nonsupervisory workers rising just 6.65% YoY last month, many can no longer afford to go with a paycheck either.
If wages lose all their gains over the last couple years via inflation (which itself mediates demand through higher prices), and the economy continues its turn towards recession, with Russia helping it along, that seems like a perfect setup for the Fed to start buying again. It’s Back to the USSR (and 2021).
I agree with Jon that the Fed ultimately will lose credibility if they raise rates. If rates are raised based on highly outdated economic conditions and realtime dynamics they’ll look more stupid than ever.
The pandemic stimulus was always going to be a waiting game in terms of adapting to the crisis and understanding the nonlinear complexity of what happened. It’s one thing to take their foot off the gas and tap the brakes, but absolutely zero reason to accelerate into realtime chaos.
The pandemic is still here and the fallout is still here and the adapting is still underway, including people quitting jobs and examining how to change their lives. The pandemic winds may also change with the refugees and exponential spread of COVID and that’s obviously not in the Fed’s obtuse game plan.
In addition, what exactly will be gained by raising rates a microscopic fraction? Additionally as petroleum inflation increases with Ukraine fallout, it seems as if people will cut back on consumption, while bottleneck challenges smooth out.
If anything the Fed needs to be patient and watch employment trends and evaluate why people are quitting. I assume that’s related to healthcare and inequality, but, patience versus political posturing is the key
I basically agree with oldbird, but the Fed will likely view a moderate increase as a risk management decision. No doubt quite a bit of the inflation is due to supply chain/reopening but some is due to previous stimulus to forestall a depression. The Fed could go 1/4 and watch. That is what I have been advocating (not that it means anything). What I thought was really foolish were the cries to shrink the balance sheet quickly and to raise rates more than 5 times in 2022- that was clearly not a good base case- and now appears ridiculous. A modest rate increase likely is warranted given the fact pattern- with fairly low confidence and the humility to wait and see after that.
In terms of group thinking here, I think everyone is hopeful for a less hawkish Fed.
A quarter rate hike will discourage super easy borrowing, which is good, but I think they’ll have clearly spell out a new alertness in regard to greater global risk.
If they have to lower rates in less than six months, their credibility will be questioned, adding to general confusion and leadership.
The employment confusion and inflation dynamics makes everything fragile and that’s why they need to appear to be far more willing to not be overreacting to old data.
Oh, wait, we’re back to watching domestic econ data – not as “exciting” as what we’ve been watching, but well okay.
My three rubles:
Fed has two audiences: investors and general public+politicians.
For investors, if Fed hints at 1 hike instead of 5, that’ll be like waving a red flag at a bull, investors will flood money into the markets, stocks will rip up, bonds will rip up, financial conditions will slam back to max easy, and that is exactly what the Fed doesn’t want.
For public+politicans, if Fed does that and inflation stays high/goes higher (which it will, regardless of what Fed does), then it will be blamed for today’s inflation, for tomorrow’s inflation, and for irresponsibility on inflation. Also exactly what it doesn’t want.
So my view is that Fed won’t act or sound dovish. It may temper hawkishness a little, but will still point toward many hikes and active QT. JOLTS data showing hot labor demand reinforces that.
The current war will be over in a couple weeks, is my feeling. Ukraine will foreswear future NATO membership and renounce claims on some territory, Russia will renounce goals for a puppet state and promise to respect borders of the new smaller Ukraine. Neither will be telling the truth, but both need this war to stop – Ukraine so it can prepare for the next one (and it’s applications to join EU and NATO), Russia so it can try to avoid economic collapse and becoming China’s vassal.
That’ll be bullish, even if sanctions remain in place and commodities prices high. More bullish for Europe, but a positive for US markets too. Which will be another reason for Fed to not change its hawkish course.
Pretty much agree with the Geopolitical part as well as the conclusion. I just thought it would happen earlier. I do think however that de-dollarization will accelerate to something that does not resemble anything but the current status of the 21st century Glaciers. As time passes the Chinese Belt and Road initiative will lead to a Multi-polar economic order in which Europe will choose to participate for for their economic survival . The US will lose it’s iron post WW2 grasp on probably all but the Anglo Saxon World and everybody will quit playing zero sum games. These games by definition don’t benefit anyone because they sow the seeds of conflict that benefits no one. All this is not the plan but likely the reality .