The August JOLTS Report Factors to Continued Labor Market Resilience

Excessive rates of interest have cooled the labor market by inflicting job openings and quits to normalize, somewhat than destroying Jobs

The labor market stays resilient and continues its swish normalization, in line with in the present day’s JOLTS report. Though job openings are clearly trending downwards, they jumped to 9.6 million in August—possible the results of statistical noise somewhat than a significant enchancment in labor market situations. On the identical time, different key JOLTS indicators remained largely unchanged and according to their pre-pandemic ranges, suggesting labor market stability. 

The general image painted by the JOLTS report is that the labor market has largely returned to its pre-pandemic state, however with considerably fewer layoffs and way more job openings. As of August, there have been simply 2% fewer month-to-month hires and 4% extra quits than in February of 2020, however 15% fewer layoffs and discharges, and 37% extra job openings. 

Maybe surprisingly, the JOLTS report means that labor market situations in manufacturing have turn out to be tighter, not slacker, for the reason that onset of the pandemic. There have been 13% extra hires and 19% extra quits in manufacturing in August than in February of 2020 earlier than the pandemic. Manufacturing, a extremely capital-intensive and interest-rate delicate trade, usually loses Jobs and sees labor markets slacken when the Federal Reserve raises rates of interest. However that doesn’t seem to have occurred. As a substitute, employment ranges within the trade have been flat all yr, and labor markets stay tight. 

Whereas building has seen a decline in month-to-month hires, job openings and quits stay properly above their typical pre-pandemic ranges—proof that yet one more interest-rate delicate trade continues to defy expectations and shrug off greater charges. 

Rate of interest hikes usually trigger the unemployment charge to rise and the employment stage to fall, notably in manufacturing and building. This charge hike cycle has been notably totally different up to now. As a result of the Fed started elevating charges at a time of appreciable extra demand for labor, greater charges have cooled the labor market by chopping job openings, not Jobs. Job openings have now fallen 20% from their peak of 12 million reached in March of 2022, whilst employment ranges have grown.

Whereas the labor market total was roughly again to regular, the August JOLTS did break two data—for the best variety of quits in arts and leisure, possible the results of the current Hollywood writers’ strike, and for record-high tech retirements (referred to as “different separations” within the report), possible the impact of the lingering tech-cession. 

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