The monthly JOLTS (Job Openings and Labor Turnover) report is a closely-watched economic data out of the United States, further detailing the state of the labor market. Before interpreting it, though, investors should know that it does not refer to the previous month, but to the month before.
As it is released forty days after the month ends, the tendency is to ignore its contents. For instance, yesterday’s release refers to May 2020, while we are fast-approaching mid-July. However, it is a leading indicator of overall employment, and, especially in recessionary times like the ones we live in, any clue about the job market turning the corner is valuable. Also, used in conjunction with the NFP data for the same month (May 2020), it completes the labor market evolution.
May 2020 JOLTS Takeaways
While job openings rebounded by 5.4 million, up 8% MoM, is still down 26% YoY. It confirms the May 2020 NFP data that indicated the job market is at levels last seen in 2015.
Accommodation and food services lead the way in the job openings report, with the largest rebound, while media and tech sectors were the main losers. Considering the economic reopening in many US states, especially in the second half of May, it is no surprise that the accommodation and food services is in the lead.
The current report represents the largest monthly increase in hires since the series began. Another encouraging sign is that the rate of layoffs and discharges decreased in May to 1.8 million, respectively, by 1.4%, coming closer to the pre-pandemic level of 1.2% registered in February this year.
To fully understand this report, one needs to focus on what a job opening refers to. The data records all positions that are open on the last business day of the reference month – in this case, it refers to all open positions on the last business day of May 2020. It considers the work availability, if the job could start within thirty days or not, and if the employer is looking to recruit workers outside of the business establishment.
Such details are important when doing a cross-sectional analysis of the US jobs market. One cannot compare the NFP number with the job openings but can compare the trend in both.
A labor market comeback is certainly there. It remains to be seen if this is just a bounce or the start of a prolonged recovery.