Why Are Job Openings at a 17-Year High?
A brief introduction to JOLTS
The “Job Openings and Labor Turnover Survey” (or JOLTS) is a monthly survey conducted by the Bureau of Labor Statistics. This survey collects data on the total employment, job openings, number of employees hired, number of employees who have quit, layoffs and discharges, and other separations. This data collection sample consists of 16,000 US businesses and covers all non-farm industries from the private and public sectors. These companies are located across the United States.
The recent JOLTS data for August were reported on September 12. Job openings increased by 54,000 to 6.2 million in August—the most job openings since this survey began in 2000.
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The use of this JOLTS data
Job openings give you an idea about demand for the labor force. If the demand for labor is increasing, it means companies are increasing production. When there’s a shortage of employees, companies are likely to increase wages to retain existing staff or attract new employees. With wage hikes come higher spending, and higher spending leads to higher demand for goods. When demand increases, prices go up, leading to higher levels of inflation (TIP).
Why the US Fed looks at the JOLTS report
As explained above, the JOLTS report gives you an idea of future demand. The Fed takes note of this data when deciding on monetary policy or changes to interest rates (BND)(AGG). Financial markets (SPY)(QQQ) don’t react as aggressively to this data as they do to non-farm payrolls data, but it still has its place among labor market indicators.
In the next part of this series, we’ll look at the other important component of the JOLTS data, how many people quit their jobs in August.