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US job openings get JOLT of life, but underlying data paints "paradoxical picture"

Journalist: John Choong (Head of Markets and Research), Newspage

ended 01. October 2024

To kick start a heavy week filled with US labour market data, the latest Job Openings and Labor Turnover Survey (JOLTs) has pushed back on suggestions that the labour market is cooling.

Job openings broke their streak of hitting a 3-year low, as openings in August rebounded to 8.04m, from 7.71m in July. It's worth noting that July's figure was also revised upwards from 7.67m. The final print also came in above consensus estimates of 7.66m. Job openings continue to remain above their pre-pandemic levels, as 7.18k jobs were open in the same month in 2019.

On the flip side, job quits have hit a 3-year low, coming in at 3.08m, and sizeably lower than July's 3.28m, and consensus estimates of 3.27m. The quits rate (voluntary job leavers as a percentage of total employment) fell to 1.9%. This signals a tight labour market as employees aren't as willing to quit their jobs in search of another one due to employment uncertainty, the quits rate tells a different story.

Newspage, asked economists, analysts, and traders for their thoughts on what this data spells for the state of the labour market, what potential forecasts they may have about this Friday's upcoming non-farm payrolls data, and the outlook for rate cuts moving forward.

2 responses from the Newspage community

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Editor
Gabriel McKeown
Head of Macroeconomics at Sad Rabbit - Substack Newsletter
The job market defies gravity with the latest JOLTS data revealing a labour market that refuses to buckle under the weight of economic pressures, throwing a spanner in the works of the 'cooling’ narrative. However, August's report paints a paradoxical picture of the employment landscape, with a surge in job openings indicating that employer demand remains robust. Yet the level of job quits has plummeted to a three-year low, with employees more hesitant to leave current positions due to uncertainty. For the Fed, these figures present a conundrum, with the resilience in job openings being seen as inflationary, giving the Fed ample reason to pause its rate-cutting ambitions. Conversely, the decline in quits might indicate growing worker insecurity, which could support the case for monetary easing. With Friday's non-farm payrolls report looming, the market is likely to expect an upside surprise, with the JOLTs data suggesting that employer demand remains stronger than previously thought.
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Platinum
John Choong
Head of Equities and Markets at Interpretiv
A deeper dive into the data revealed a more complex landscape in the latest JOLTs numbers. The bulk of new openings actually came from the construction and government sectors, which have been propping up recent non-farm payroll numbers. Excluding these, there was a significant 93k decline in service sector openings, which aligns with the contraction in employment noted in the latest ISM manufacturing PMI.

This sectoral divergence is crucial. It suggests that while some areas of the economy remain robust, others are showing signs of weakness — and the drop in job quits to a 3-year low confirms this.

Thus, looking ahead to Friday's non-farm payrolls, we expect August's number to be revised downwards, due to weaker-than-expected services employment. However, we anticipate September's headline number to continue trending above 100k, masked by government hiring.