uploads///job _

Could Increasing Job Openings Mean Trouble for Markets?

By

Mar. 20 2018, Updated 2:27 p.m. ET

US job openings at an all-time high 

The Bureau of Labor Statistics released its JOLTS (Job Openings and Labor Turnover Survey) data for January on March 16. According to the report, the total number of job openings on the last day of January was 6.3 million, an impressive increase from the 5.6 million job openings seen in December, and the highest reading since the beginning of the survey in 2000. The previous high was 6.1 million job openings in September 2017.

JOLTS data is collected through a monthly survey of job openings, number of new employees hired, number of employees who have quit or have been asked to leave, and other job separations. A total of 16,000 US businesses in government, private, and non-farm sectors are included in this survey.

Article continues below advertisement

Why should we track job openings?

The JOLTS report gives us an idea of labor force demand in the United States. If the number of job openings continues to increase amid low unemployment, wages could increase. Labor unavailability could force companies to pay higher wages to attract employees. Increasing wages are a key driver of inflation (TIP) growth, which is a key metric considered by central bankers in policy decisions.

Importance of JOLTS data

Employment health is paramount in any economic cycle. Increasing job opportunities and aggregate demand are a positive sign for the economy. These increases could lead to higher inflation, which could force the US Fed to increase interest rates to combat rising inflation (VTIP). This fear of rising rates, which was triggered by higher average hourly wage growth in January, led to a sudden spike in volatility (VXX) and a 10% correction of equity indexes (VOO) at the beginning of February. Any labor market surprises could also impact the bond (BND) and currency (UUP) markets, which are affected by interest rate decisions. In the next part of this series, we’ll look at another important component of the JOLTS data.

Advertisement

More From Market Realist

  • Open sign on a sidewalk
    Macroeconomic Analysis
    Top Reopening Stocks to Play the Shifting Market Sentiment
  • Morgan Stanley sign and stock numbers
    Macroeconomic Analysis
    Morgan Stanley's Buyback Stock Picks in 2021
  • Black Wall Street sign is sign of ethical investing
    Macroeconomic Analysis
    Ethical Investing Stocks and Funds for Your 2021 Portfolio
  • New York City skyline and Goldman Sachs logo
    Macroeconomic Analysis
    Goldman Sachs: Options Trade Picks to Play Earnings Season Volatility
  • CONNECT with Market Realist
  • Link to Facebook
  • Link to Twitter
  • Link to Instagram
  • Link to Email Subscribe
Market Realist Logo
Do Not Sell My Personal Information

© Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.