Why the May JOLTS report was ‘jolting’

Job openings came in higher than expected at 7.7 million for the month of May.

Transcript

00:00Brian, I first want to get your reaction to the JOLTS report.

00:03Job openings came in higher than expected at 7.7 million for the month of May.

00:09Yet at the same time, we saw a decline in hiring.

00:12So what does that tell us about the current labor market?

00:15Yeah, the JOLTS report was a little jolting to see that big increase in the number of job openings.

00:22But as you point out, the level of hirings isn't really changing all that much.

00:27I think that it really feeds into the narrative that Chair Powell has been talking about,

00:32how the economy seems to be stuck in this uncomfortable equilibrium of kind of this no hire but yet no fire situation.

00:42Most of the job openings that we saw, accommodation and food services.

00:45So some of that could be seasonal adjustments or it could be due to the employers letting attrition run a little too far.

00:53And so attrition is just when they let people leave and they don't necessarily replace them.

00:58And now they might be scrambling to do that.

01:00So I think that the labor market as a whole is looking softer.

01:05But this does give us a little glimmer of hope that maybe we could see an acceleration

01:11if we get a little bit more clarity on taxes and tariffs.

01:15We talked about the 7.7 million job openings.

01:18So you say that reflects continued softness in the labor market.

01:23But are they still indicative of a healthy jobs market?

01:28It's healthy, but I think getting a little bit of a case of the sniffles might be a way to think about it.

01:33So it's still healthy, but not as healthy as it used to be.

01:37And I think that one of the indicators I like to look at with jolts is comparing the quits rate to the layoffs rate.

01:44And we know that the quits rate moved up from 2% to 2.1%.

01:48And so people are getting a little bit more confident, maybe temporarily, to actually just jump ship.

01:54And that is a sign of a healthier labor market when you see that the quits rate is actually beginning to increase.

01:59But the layoffs rate is historically low.

02:02It's at a very low level, and so it becomes a question of which one kind of moves first.

02:08I think that maybe that layoffs rate is going to pick up at least in the short term

02:13before then we see the higher rate begin to show a little bit more strength.

02:17So perhaps it is just a temporary case, maybe a little bit of a seasonal cold

02:22that the labor market might be experiencing here as opposed to something more protracted.

02:32So perhaps that's true.