When the monthly employment report was released last Friday, some doomsayers were red-faced.
Friday’s report contained revised data for the August labor market: that payrolls in August grew by 89,000 instead of falling by 4,000 as originally reported. Observers who were citing the first drop in payrolls in four years as a sign the economy was floundering were largely silent when the revisions were released. Today though, yet another government report confirmed the August weakness in the labor market.
According to the often-overlooked JOLTS report – Job Openings and Labor Turnover survey – released Wednesday, hiring fell in August, particularly in the private sector. Total hiring was down 61,000 from July; private sector hiring was off 125,000 (which means government hiring was up by 64,000).
At the same time, there were 31,000 fewer separations (quits, layoffs, retirements, etc.) in August than in July, including a dip of 26,000 in the private sector.
In short, private sector payrolls fell by a net 99,000 while government payrolls increased by a net 59,000.
That these numbers are slightly different than the employment report is a matter of timing. The employment report is the change in the number of payroll slots from the middle of one month to the middle of the next, using the Bureau of Labor Statistics’ “establishment survey” tracking the number of jobs covered by payrolls which include the 12th of the month. The JOLTS report is based on end of month data and covers all the hiring or separations which took place during the month, which also explains why it is issued with a greater time lag than the employment report.
One of the reasons the JOLTS report doesn’t receive the same attention as the employment report is that it is relatively new (it began in 2001) and a lot of economists like to see a longer trend to determine how meaningful a data series is.
Nonetheless, the outlook for jobs weakened according to the JOLTS data. At the end of August employers reported 40,000 fewer job openings than reported at the end of July, all in the private sector.
The decline in job openings, predictably, was a further reflection of the struggles in housing with construction job openings down by 15,000. Hiring in the construction sector dropped by 31,000 from July to August while separations were essentially unchanged.
The JOLTS report not only corroborates labor market weakness, it also suggests some optimism. The “quits” rate, that is the percentage of workers who leave their jobs voluntarily, confident they can find other jobs, was 1.9% and has been unchanged for five months.
Though down from 2.0% in March, the quits rate is at its lowest since December 2004. Further declines would suggest workers would rather stay put than struggle with finding a new job.