This morning’s Job Openings and Labor Turnover Survey (JOLTS) report from the Bureau of Labor Statistics for September showed a larger-than-expected decrease after last month’s slight uptick. This was a significant disappointment from forecasts and continues the longer term downward trend of job openings since early 2022. Now at their lowest level since January 2021, the number of available openings are showing no signs of improvement. The health care and government sectors saw openings fall most, both of which are noncyclical. Adding to the discouraging outlook and downward trend, the previous month’s figures were revised downward significantly.
Beyond the headline disappointment, there were additional signs of underlying labor market weakness in the report. Although the hires rate saw a minor uptick, it remains at levels comparable with the depths of the pandemic and, prior to that, in 2014. Meanwhile, the rate of job quits has declined further, suggesting that employees are feeling less confident about finding alternative job opportunities which implies a limited job market.
As we discussed in last month’s issue of InvesTech Research, cracks have been forming in much of the underlying employment data. The JOLTS report for September underscores this growing instability. While the labor market has historically been a lagging indicator, weakness in job openings and quits have historically provided a confirming warning sign that not all is well. Should job opportunities continue to fall while layoffs rise, it would be a warning that economic growth has slowed and conditions have become much tighter. Today’s report reaffirms the need to watch the labor market closely for indications of broader economic trouble ahead.