US job openings data fell to 5.4 million in August
According to the U.S. Bureau of Labor Statistics, job openings fell to 5.4 million in August after reaching a new high of 5.7 million in July. This is below the median estimate of 5.6 million.
A fall in the job opening rate to 3.6% in August reflects that businesses are getting cautious in their approaches toward new hiring.
The Industrial Select Sector SPDR ETF (XLI) and the First Trust Industrials/Producer Durables AlphaDEX ETF (FXR) have lost 7.2% and 11.2%, respectively, year-to-date as of October 16, 2015. Industrial stocks such as General Electric (GE) and Roper Technologies (ROP) have gained 14.7% and 11.1%, respectively, over the same period.
Hires and separations were little changed in August
The number of hires and separations stood at 5.1 million and 4.8 million, respectively. Within separations, the quits rate was 1.9%, and the layoffs and discharges rate was unchanged at 1.2%.
Though companies are not hiring new employees, the layoff and discharge rate’s remaining unchanged at 1.2% suggests that the economy is not losing growth stream, but rather companies are playing it safe with their expansion approaches.
With a fall in job openings at both total private and government levels, the job openings rate in August decreased to 3.6% against 3.8% in July 2015. For the month of August, a fall in state and local government job openings was seen at -33,000 while in nondurable goods manufacturing it was at -25,000.
Mining sector struggles with falling commodity prices
Over the past year, job openings increased for several industries, with the largest increases occurring in professional and business services with 184,000 and in healthcare and social assistance with 103,000. Job openings decreased in arts, entertainment, and recreation by 31,000 and in mining and logging by 14,000.
Oversupply of industrial commodities and falling demand in the global market have forced the mining sector to optimize resources and reduce manpower. The SPDR S&P Metals & Mining ETF (XME), which tracks the performance of metals and mining companies, is down 43.8% over the past year as of October 16, 2015.
Due to slow growth, businesses are cautious about new hirings. In the next article, let’s see how this pessimism affects the confidence of consumers in the economy.