There were 9.82 million open jobs across the world’s largest economy on the last business day of May, closely watched data released on Thursday showed.
That was fewer than anticipated and it counted as good news following an unexpected uptick the prior month.
The Fed is, of course, counting on job openings to fall. The viability of the soft landing narrative depends on it. In theory, vacancies can recede with slower demand, and with fewer unfilled openings, the labor market will balance and wage growth will normalize. That, in turn, can defuse the wage-price spiral bomb, and ultimately bring inflation back down near target.
That narrative enjoyed what I’d describe as a minor boost on Thursday when the headline JOLTS print showed a 496,000 drop from the prior month’s upwardly revised figure.
Effectively, the last two months offset each other to leave total openings in the ballpark of levels witnessed at the end of March.
Hires rose and the gap, at 3.6 million, was the narrowest since June of 2021, although that’s not saying a lot. The implied jobs to jobless ratio slipped to 1.6, the lowest since October of 2021.
Now for the bad news: Quits rose sharply to 4.015 million, the highest since December. The increase from April was the biggest since November of 2021.
The quit rate moved back up to 2.6.
This report was, in some ways, the opposite of its predecessor. In the April update, openings rose sharply but quits fell. In Thursday’s refresh, covering May, openings erased most of the prior month’s rise, but quits increased.
As a reminder: You want fewer quits. Quits are churn, and churn is indicative of intense competition for scarce workers — and the higher wage offers that go along with competing. Layoffs were little changed.
I’d be inclined to say this was a wash from the Fed’s perspective. It’s nice that openings fell, but the sizable increase in quits is bad news for policymakers trying desperately to restore a sense of normalcy in a still distorted labor market.
And still no proof that wages are really driving inflation… Indeed, the fall in real wages keeps suggesting (to me) that officials should look elsewhere than the labor market if they want to contain inflation (faster than its present day falling)…
An interesting take from an EU standpoint which you might enjoy in today’s Free Lunch comment in the FT.
Free Lunch: What if there is nothing central banks can do about inflation?
Well, we know that’s not entirely incorrect. Sure, they can provoke a recession but that has cure worse than the disease vibes.
When it comes to supply shocks and corporations taking advantage to re-anchor prices higher, there’s little the Central Banks can do…
I think historically wages chase inflation. Do they make inflation worse? Yes, but many situations are more dominated by supply rather than demand. My personal view is stagflation is where we are headed. I believe our economic problems are serious made worse by political behavior. I think our political problems stem from a war with the truth, and a triumph of unhealthy emotions over facts. Robert Rubin said you can’t tell the truth in politics….
I was a quitter last month.
I wonder what the difference in percentage is between those that are making a go of it but quit thinking they can do better and those that aren’t making a go of it and are desperate to find a job that will lift them up to a makeable level.
Reading this article about the graying of America, labor shortages gonna get worse. https://wapo.st/44z75MQ