No shocks in September JOLTS
The strong labor market is resilient.
Total job openings increased in eight states in September. Some of the states, including Texas, Michigan, and Virginia, which posted large declines in job openings in August, saw their numbers bounce back up in September. Both the number of job openings and job opening rates showed increases across all four regions (Northeast, Midwest, South and West) of the country.
In terms of the job openings to unemployed workers ratio, the Federal Reserve’s preferred measure of labor market tightness, 34 states had a ratio equal to or greater than the national level of 1.9. Every state had a ratio greater than 1, the Federal Reserve’s target.
Hires dropped in nine states, which include California, Texas and Ohio. Though a majority of states’ hire rates were unchanged, the rate of national hires slowed down in September. Two reasons that could lead to this slowdown: 1) It could come from the tight labor supply, which indicated that some employers might have trouble filling positions as the unemployment rate was at historically low levels. 2) It also could come from the deteriorating labor demand as some companies started to put on hiring freezes because of rising borrowing costs.
Voluntary quits remained unchanged in 36 states. Different regions are showing different quits pictures. Quits decreased in many states in the South, which includes Texas, Florida and Georgia. However, states in the Midwest, such as Illinois, Michigan and Kansas reported increases in the quits level.
September’s national layoffs edged down. The statewide layoffs report did not include the large layoffs that we have seen recently in the technology and information sectors. We will likely see the headcount of total layoffs going up in the next national and state-wide JOLTS (job openings and labor turnover survey) reports. Additionally, hiring freezes at the major online retailers are likely to show up in October’s report. However, October’s retail sales have shown the resilience of consumer spending. We should still expect to see moderate hiring in the retail trade industry. The national layoffs rate may not move materially for the rest of the year.
The Bottom Line:
The job market remained tight in September; for every unemployed person, there were two job openings. As the Federal Reserve Chair Jay Powell mentioned in the press conference earlier this month, the supply and demand of labor remains out of balance. The Fed needs to see job openings and hires materially slow down before it contemplates a pause on hiking the fed funds rate.