After seven consecutive months of massive increases in job openings (where even the weakest month saw a 290K increase and the strongest, July, saw a record 913K new jobs openings), moments ago the BLS reported that in August, the number of job openings in the US finally tumbled, dropping by a whopping 659K in August (recall the JOLTS report has an extra month delay vs the payrolls report), the third biggest drop on record, and the first monthly decline of 2021. Still, even with the big drop, the total number of job openings remains a solid 10.439 million, the second-highest number on record!
The sharp drop in openings took place one month before millions of Americans lost their emergency pandemic benefits, and while we have yet to see a big surge in payrolls as a result of millions of unemployed workers collecting benefits returning to the workforce, we expect continued declines in job openings in the coming months as more and more vacant jobs are filled. But not just yet.
Looking at the details, job openings decreased in several industries with the largest decreases in health care and social assistance (-224,000); accommodation and food services (-178,000); and state and local government education (-124,000). Job openings increased in the federal government (+22,000). The number of job openings decreased in the Northeast and Midwest regions
As a reminder, when looking at the JOLTS report last month, we pointed out that for the first time ever, there were over 2 million more vacant jobs than unemployed workers. Well, fast forward one month and despite the sharp drop in job openings, since the number of unemployed people also dropped, there was still a staggering 2+ million more vacant jobs than unemployed workers confirming that the US labor market remains painfully cracked.
Obviously, with far more job openings than unemployed workers, this meant that in August there were again less than 1 unemployed workers (0.8031 to be exact) for every job opening, up from 0.7841 in July, and down from a record 4.6 at the peak crisis moment last April.
Furthermore, in August in addition to a decline in job openings, we also saw a modest slowdown in hiring: in August the BLS reported that hiring dropped by 439K – the biggest monthly decline of 2021 – to 6.322 million, as hires decreased in accommodation and food services (-240,000) and in state and local government education (-160,000).
Perhaps the most interesting highlight of today’s JOLTS report, however, was neither the openings nor the hiring activity, but rather the number of quits, which surged by 242K to a new all-time high of 4.270 million. The quits rate increased to a series high of 2.9% as quits increased in accommodation and food services (+157,000); wholesale trade (+26,000); and state and local government education (+25,000). As a reminder, this “take this job and shove it” indicator is generally seen as a real-time proxy of how marketable employees think they are, as they tend to quit jobs and look for higher-paying occupations when the job market is red hot. And since it tends to lag peaks in job openings modestly, the surge in quits was probably not all that surprising.
Still, with emergency benefits expiring one month after this latest JOLTS report took place, we wouldn’t read too much into it since virtually everything is set to change in the coming months as a new and unknown dynamic emerges as millions of Americans start returning to the labor force.