September JOLTS Report: Hurricanes Do Not Disrupt Late Cycle Trend

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by: Hale Stewart

By New Deal Democrat

Take Tuesday's JOLTS report with an extra grain of salt, as it was affected (particularly in the South census region - more on that later) by Hurricanes Harvey and Irma.

That being said, the disconnect between the "soft data" of openings in this survey and the "hard data" of actual hires and discharges continues. As I have pointed out many times, openings can be just chumming the water for resumes, or even laying the groundwork to hire foreign workers. The disconnect betrays an unwillingness to pay new hires more or to engage in on-the-job training.

In September, openings continued to run about 10% higher than actual hires, which have been basically flat for the last year:

To reiterate, the major shortcoming of this report is that it has only covered one full business cycle. In that cycle, hires peaked and troughed before separations:

Further, hires stagnated, and shortly thereafter involuntary separations began to rise, even as quits continued to rise for a short period of time as well:

(Note: The above graphs show quarterly data to smooth out noise.)

Here are hires versus separations on a monthly basis for the past several years:

Once again for this report, even while quits remain at expansionary high levels, involuntary separations bottomed a year ago and have risen on a quarterly basis ever since. Here's the monthly view of the past several years:

Finally, because September data has all been affected by the hurricanes, the BLS attached a note explaining that it made no special adjustments, and that the data is not broken up by states, so it is impossible to know the precise impact. But because the data is broken down by Census Region, we can exclude the Southern Region and see what was going on in the rest of the country, which was not affected. I've prepared that for openings, hires, quits, and layoffs and discharges below (and helpfully marked the expansion highs (low for layoffs) with an "H" (and "L") symbol):

Month Openings Hires Quits Layoffs/
discharges
9/16 3595 3158 213 975
5/17 3640 3350 237 922 L
6/17 3882 3224 219 1078
7/17 3897 3416 H 253 H 1113
8/17 3965 H 3253 250 1127
9/17 3935 3174 247 1070

The "soft data" openings have remained very close to their high of one month ago, while quits are down a little more (about 2%) from their recent highs, but hires are down significantly from their recent high (about 7%) and up only slightly (less than 1%) from one year ago. Meanwhile, layoffs and discharges declined significantly compared with the past several months, but remain substantially higher than they were one year ago.

There is nothing in Tuesday's data that portends any imminent recession, but on the other hand, it continues the slew of data that says we are late in the cycle.