*The U.S. Job Openings and Labor Turnover Survey (JOLTS) is published with a one-month lag, but it complements the Bureau of Labor Statistics’ (BLS) Employment Report by providing detailed insights into labor market dynamics including job openings, hires, layoffs, and other separations. According to JOLTS, job openings declined for the first time since April in August, hires increased only slightly, remaining well below the level observed in the early stages of the recovery, but layoffs fell sharply.

 

*The U.S. recouped 11.4m of the 22.2m jobs lost in March and April very quickly, but the levelling off in hires and decline in job openings suggest that it will take much longer to recoup the remaining 10.8m jobs lost. These labor market dynamics are consistent with the slowdown in nonfarm payroll growth over the summer following the strong rebound in May and June (Chart 1).

 

Job openings declined to 6.5m in August from 6.7m in July, falling further below its pre-pandemic average of 7.1m, a discouraging sign that the demand for labor is already softening less than six months into the recovery (Chart 2). In August, job openings fell in all private sectors except manufacturing (+30k, see Chart 3), accommodation and food services (+21k), professional and business services (+4k), and wholesale trade (+3k). Job growth in manufacturing, accommodation and food services, and wholesale trade sectors accelerated in September, even as overall job growth slowed.

 

Total hires increased slightly, by 16k, to 5.92m in August after averaging 7.09m in May and June (Chart 4). A slowdown in the pace of hiring was to be expected after the initial boost from the reopenings, but its quick return to February’s level points to a sluggish labor market recovery going forward. Hires in the manufacturing (+58k above February’s level) and retail (+36k above) sectors remained elevated, consistent with the V-shaped rebound in retail sales, elevated manufacturing optimism, and strong growth in manufacturers’ new orders (Chart 5). Meanwhile, total hires in the leisure and hospitality sector - most adversely impacted by the pandemic - declined by 213k in August, placing it 136k below February’s level (Chart 6).

 

Total job separations remained very low, with layoffs declining to 1.5m in August from 1.7m in July (Chart 7), the smallest number of layoffs in the survey’s 20-year history, and voluntary job quits declined by 139k to 2.8m in August, well below the pre-pandemic average of 3.5m, suggesting that households are not confident in job-finding prospects.

 

Labor market flows from the BLS’ Employment Report point to a further slowing in the rate of hiring in September: 3.3 million persons moved from “unemployed” to “employed”, down from 4.7m in August (Chart 8). Moreover, layoffs probably started to increase again in September: the number of persons moving from “employed” to “unemployed/not in the labor force” jumped to 7.1m from 5.8m in August (Chart 9).

 

The BLS’ September Employment Report showed the number of individuals on temporary layoff/furloughs falling and number of individuals who have permanently lost jobs increasing (Chart 10). This is a troubling sign, suggesting that some temporary layoffs are being made permanent and that a greater share of new job losses are permanent. The permanent scars from this crisis are growing.

 

Chart 1:

 

Chart 2:

 

Chart 3:

 

Chart 4:

 

Chart 5:

 

Chart 6:

 

Chart 7:

 

Chart 8:

 

Chart 9:

 

Chart 10:

 

Roiana Reid, roiana.reid@berenberg-us.com

 



Member FINRA & SIPC

This email and any files or attachments transmitted with it may contain confidential or privileged information and are intended solely for the use of the intended recipient. If you are not the intended recipient, please do not copy, retain, disclose or use any part of the message or its attachments. Please notify the sender immediately by return email and destroy or delete any copies. Dissemination or use of this information by anyone other than the intended recipient is unauthorized and may be illegal. Communications by email cannot be guaranteed to be secure or error-free. Emails and their attachments are subject to being intercepted, becoming corrupted, getting lost or delayed, or may contain viruses. Therefore, neither the sender nor Berenberg Capital Markets LLC (BCM) accepts any liability for any errors or omissions in the content of this message or problems in its transmission, including those arising as a result of its transmission over the internet.

BCM does not assume liability for the correctness and completeness of all information given and/or attachments contained herein. The provided information has not been checked by a third party, especially an independent auditing firm. BCM explicitly points to the stated date of preparation. The information given can become incorrect due to passage of time and/or as a result of legal, political, economic or other changes. BCM does not assume responsibility to indicate such changes and/or to publish an updated document. Any document(s) or attachment(s) is meant exclusively for institutional investors and market professionals, but not for private customers. It is not for distribution to or the use of private investors or private customers.

In light of upcoming regulatory changes, please be informed that BCM will continue to share information with you until unsubscribe@berenberg-us.com receives your termination/deletion request. For more information about the General Data Protection Regulation (GDPR) and our privacy policies please refer to https://www.berenberg-us.com/legal-notice. BCM reserves all the rights in this communication. No part of this communication or its content may be rewritten, copied, photocopied or duplicated in any form by any means or redistributed without BCM’s prior written consent.

The information contained herein and sourced may have been adopted from various news sources, for example, Bloomberg, Reuters, Street Account and various other sources. BCM does not claim accuracy, completeness, timeliness, suitability, or otherwise regarding all the information on the securities, stock markets, or developments referred to within. On no account should the Content be regarded as a substitute for the recipient procuring information for himself/herself or exercising his/her own judgments. BCM is not responsible for any recipient(s) use of this information. This Content is not a solicitation or an offer to buy or sell any of the securities contained herein. This information does not constitute a recommendation or take into account the particular investment objectives, financial situations, or needs of clients. Clients should consider whether any advice or recommendation in this Content is suitable for their particular circumstances and, if appropriate, seek professional advice, including tax advice. The price and value of securities which may be referred to in this Content and the income from them may fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain securities.