Increase in November’s Job Openings Not Whole Story

The latest Job Openings and Labor Turnover Survey (JOLTS) showed that job openings rose from an upwardly revised 7.839 million in October to 8.098 million in November, which was above what economists had forecasted. However, the hiring rate fell to 3.3% while the quit rate also fell to 1.9%, putting both at over 10-year lows not counting COVID.

What’s the bottom line?
While the Fed watches this report to monitor slack in the labor market, there are flaws in the data. The increase in working from home means job listings are being posted in multiple states more frequently. As a result, they’re being overcounted in the JOLTS total so the report may be weaker than the headlines suggest. In addition, a low quit rate is also a sign of weakness because it suggests people are seeing fewer opportunities to pursue. This is also reflected in the job openings to unemployment ratio, which compares the number of job openings to the number of unemployed persons. That ratio now stands at 1.1, a big decline from the peak above 2 in 2022 and shows a labor market that is cooling.