The JOLTS report
JOLTS (the “Job Openings and Labor Turnover” report) produces monthly estimates of job openings, hires, quits, layoffs and discharges, and other separations. Although there’s a lag of one month in reporting, JOLTS data help measure demand for labor (employers’ need for employees) and track the economy’s health. Job openings are a measure of the “stock” of vacancies. The one-day reference for job openings gives a snapshot of the need for employees in different parts of the economy and allows the BLS to monitor changes over time.
The “Job Openings and Labor Turnover Survey” was issued by the Bureau of Labor Statistics (BLS) on Tuesday, February 11. The crucial headline number, job openings, came in at 3.99 million for December—not very different from November’s number of 4.03 million. The hires rate (3.2%) and separations rate (3.2%) also showed little change in December.
The number of openings was little changed in total private openings but decreased in government openings. The number of job openings decreased in healthcare and social assistance, in arts, entertainment, and recreation, and in state and local government. The Midwest region experienced a decline in job openings in December.
A positive JOLTS report—one that shows the number of job vacancies is increasing—will mean the economy is recovering. Businesses expand as they see higher demand and so hiring activity is on an uptick. This will mean, other factors remaining constant, that the Fed taper will proceed as the economic environment improves, which in turn means lower bond prices as Fed demand for securities slackens—especially for longer-term Treasuries and agency-backed securities—and higher interest rates.
As expected, the JOLTS report didn’t produce any major shifts, and it actually declined slightly from November’s 4.03 million, to 3.99 million. As a result (and because this report lags the job creation statistics release, which, at 113,000 new jobs in January, fell short of expectations) it’s less likely to impact bond markets.
This view is reinforced by the initial jobless claims report released on February 13 for the week ended February 8. Initial claims increased by 8,000 to 339,000 from last week’s figure of 331,000—higher than the consensus estimate of 330,000. This implies that employment numbers aren’t gaining traction as expected, which, other things remaining constant, may cause economic growth to slow and force the Fed to reduce the pace of tapering, which will slow price declines in bond markets expected as a result of the taper and increase interest rates. To read about these influences on U.S. debt markets, move on to Part 4 of this series.