U.S. non-farm job openings fell 150k to 4.99 million in March, as per the JOLTS survey out this morning. This was the biggest month-over-month drop since last September, when openings shrank by 247k (Chart 1).
This is one month’s data, and one month does not a trend make. Besides, this comes after a 179k gain in February. So, it is probably nothing. Nonetheless, there are a few things worth a close watch.
First, March also saw a sub-100k creation in non-farm payroll – 85k, to be exact, breaking a 12-month stretch of 200k-plus jobs; April went back over 200k, though. So the next couple of months are crucial, see if the payroll momentum is intact.
Second, job openings tend to be forward-looking. We only have this series going back to 2004, so we are talking 11 years of data. Not a whole lot. The good thing is, it does include the 2008 peak and the 2010 bottom in payroll. On both occasions, job openings led non-farm payroll by about nine months. So it is important when they peak.
Third, the number of people who are quitting is still healthy. In March, they totaled 2.78 million, an all-time high in the current recovery. February was revised higher from 2.69 million to 2.72 million. These are people who are voluntarily quitting. Generally speaking, people do not quit unless they have a job lined up. So this bodes well.
Fourth, the ratio of job openings to unemployed peaked in February. For a healthy job market, the red line in Chart 2 needs to continue to push higher. As should the green bars, which have trended lower the past couple of months since the January high. Hopefully not a trend!
Thanks for reading.
