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What the JOLTS Job Report Says about US Economy

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August JOLTS data didn’t show much change

The Job Openings and Labor Turnover Survey (or JOLTS) is a monthly survey conducted by the Bureau of Labor Statistics. This survey looks at employment data, job openings, the number of employees hired, the number of employees who have quit, layoffs and discharges, and other separations from 16,000 US businesses. The survey covers both private and public non-farm sectors.

The JOLTS data for August were reported on October 11. Job openings remained unchanged at 6.1 million as of the last business day in August, remaining close to an all-time high of 6.2 million openings reported in July.

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Why should we track JOLTS data?

This JOLTS report, despite being highly volatile, gives us a fair idea about the demand for labor force and the health of the economy. When companies plan to increase production, the demand for workforce increases. If this rise in demand leads to a demand-supply imbalance, there’s a possibility of rising wages to attract new employees. Rising wages could lead to improved spending and a higher rate of inflation (TIP).

Importance of JOLTS report in the current economic climate

As explained above, the JOLTS report can be considered a forward indicator of economic activity. The US Fed takes this measure into consideration when making monetary policy decisions involving interest rates (AGG), which impact the US bond (BND) and currency markets (UUP). Though this report doesn’t have an immediate impact on the financial markets (SPY), investors should look at longer-term trends in JOLTS data to better understand the industries that they are invested in.

In the next part of this series, we’ll look at how many people quit their jobs in August, the other important component of the JOLTS data.

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