Job openings were little changed from the prior month on the last business day of January, an inconclusive JOLTS report from the BLS on Wednesday showed.
The 8.863 million headline print would’ve disappointed those hoping for incremental evidence of labor market normalization, but another decline in the quit rate made it a wash. And the release anyway wasn’t amenable to quick analysis: It included a raft of revisions.
For what it’s worth (nothing, as usual) consensus wanted to see a drop in total openings to 8.85 million.
If your measure of “progress” is the gap between openings and hires (and I’m not necessarily suggesting that should be the progress proxy), the normalization process stalled months ago.
Personally, I think we might’ve reached the point of diminishing returns when it comes to what we can ask of the JOLTS headline. It shouldered a disproportionate share of the “immaculate disinflation” burden and I doubt we can realistically expect that to continue.
That’s a polite way of saying that from here, it’s far more likely that meaningful declines in job openings will require a commensurately meaningful abatement of demand, which is to say economic deceleration.
On the bright side (i.e., in support of the immaculate disinflation narrative), the quit rate was the lowest since August of 2020 in January, Wednesday’s release showed.
Total quits were 3.385 million, the fewest in three years. Layoffs idled near historic lows.
All in all, there wasn’t anything in the JOLTS update to change the narrative. The implied openings to unemployed ratio ticked higher to 1.44. The low was in October at 1.35. That’s the JOLTS-derived measure of “progress” the Fed prefers, and like the openings-to-hires spread, it suggests little in the way of incremental labor market normalization over the past several months.
To reiterate: I doubt there’s much else we can ask from job openings when it comes to facilitating so-called immaculate disinflation. Openings will, at some point, recede closer to pre-pandemic levels. But that’ll almost surely be accompanied by a weaker economy and actual job losses.
I, and I guess everyone, have been thinking about the following scenario: economy continues to grow pretty well + inflation is sticky + the Fed makes zero cuts in 2024 + interest rates stay high = then what? Who wins and who loses?
Maybe you buy the big banks (NIM goes up, AOCI loss fades as bonds mature, loan demand hangs in, they don’t have much CRE, non-bank lenders are pressured by high rates, Fed blinks on capital requirements). Maybe you buy REITs (occupancy stays high, new supply falls away, they scoop up distressed properties from banks/developers). Maybe you buy tech (cash-rich, if no-one cares about valuation then they don’t care about rates, and Lord AI sure doesn’t). Maybe you buy mid-cycle cyclicals (it isn’t early cycle, and doesn’t seem like late-cycle either, so by default . . . ).