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Job Openings at Record in July, Quits Ticks Up

The Bureau of Labor Statistics (BLS) has released its Job Openings and Labor Turnover Summary for the month of July. While this so-called JOLTS report pre-dates the latest unemployment report, and while this report never really moves markets, it does aim to show the real detail within the turnovers and job openings within the U.S. workforce. Without job openings, and without employees quitting their existing jobs to move up or elsewhere, there can be no good jobs market.

The good news is that July marked a series high of 5.8 million job openings on the last business day of July. Wednesday’s report showed that the number of hires and separations ticked lower to 5.0 million and 4.7 million, respectively.

Within separations, the quits rate was listed as 1.9%. That marks the same reading for the fourth consecutive month. Layoffs and discharges were down to a rate of 1.1%.

On the total job openings, the prior monthly high was 5.4 million, and that was just in May 2015. The job openings rate for July was higher at 3.9%, after measuring 3.6% in the prior three monthly reports. Several industries saw a rise in job openings in the month of July:

  • Professional and business services (+122,000)
  • Accommodation and food services (+82,000)
  • Retail trade (+77,000)
  • Nondurable goods manufacturing (+27,000)

The number of job openings on a year-over-year basis showed some similar trends. July’s job openings for government were said to be little changed, but the largest yearly increases were seen as follows:

  • Professional and business services (+452,000)
  • Health care and social assistance (+174,000)
  • Accommodation and food services (+141,000)
  • Retail trade (+136,000)

We have now seen an impact from lower oil and commodity prices. The BLS data reported that job openings decreased over the year in mining and logging, but only by 8,000 jobs.

July’s number of hires was 5.0 million, down slightly from June, to a rate of 3.5%.

The total separations, or turnover, includes the combined number of quits, layoffs and discharges, and other separations. Quits are currently more important than layoffs and discharges because it is a time when many employees have been moving to different companies for a better job or for other reasons.

Wednesday’s report showed that there were 4.7 million total separations in July, down slightly from June, for a separations rate of 3.3%. Again, the quits rate is now the focus — and there were 2.7 million quits in July (little changed from June). The BLS said:

Although the number of quits has been increasing overall since the end of the recession, the number has held between 2.7 million and 2.8 million for the past 11 months. The quits rate was unchanged in July, measuring 1.9 percent for the fourth month in a row. The number of quits was little changed for total private and unchanged for government over the month. Quits fell in professional and business services (-57,000) and in the West region (-107,000), and was little changed in the other industries and regions in July.

The number of quits (not seasonally adjusted) increased over the 12 months ending in July for total nonfarm, total private, and government. Over the year, quits increased in accommodation and food services (+101,000), state and local government (+27,000), and educational services (+23,000). Quits decreased over the year in finance and insurance (-25,000) and in nondurable goods manufacturing (-18,000). In the regions, quits increased in the South (+168,000) and Northeast (+67,000), but fell in the West (-85,000).

So, what does the big picture look like? Over the 12 months ending in July 2015, the total hires were 60.6 million versus total separations of 57.8 million. On a net basis, this generated a net employment gain of 2.7 million.

By Jon C. Ogg