Another excellent way to access the strength of the job market is via the monthly JOLT report from the Bureau of Labor Statistics. Job openings were little changed at 6.0 million on the last business day of October and remain near record highs. Over the month, hires increased to 5.6 million. Separations were little changed at 5.2 million. Clearly the job market is strong.
The job openings and labor turnover survey serves as a demand-side indicator of labor shortages at the national level. Data on job openings, hires, quits, layoffs and discharges, and other separations are based on a sample of approximately 16,400 establishments and cover all nonfarm establishments in the private sector as well as federal, state, and local governments in the 50 states and the District of Columbia. Levels and rates are calculated for each category. The rate is the level as a percent of total employment. For job openings, the rate is computed as the number of openings as a percent of employment plus openings. The data are useful in determining what is behind the net numbers released in the monthly report.
Businesses have plenty of job openings to fill, although the number has been fluctuating somewhat over the past few months. It was 6.18M in September, 6.09M in August and was 6.00M on the last day of October. Job openings compared to employment levels fell 0.1 percentage point to 3.9%. Job openings have grown by 7.3% year on year, (y/y).
The number of private hires rose 247,000 to 5.2 million, while government hires were little changed. Total separations remained at 5.2 million, putting the separations rate at 3.5%. Separations fell slightly from 5.34M in September to 5.19M in October. The rate of separations fell 0.1 percentage point month on month to 3.5%. Separations were up 2.7% y/y.
Thus net hiring in October was 374,000 a significant gain over last month’s 76,000. The quit rate, (which is an excellent sign of how plentiful and easy jobs are to come-by) remained steady at 2.2% where it has been for several months. The number of quits was 3.18M, up 3.3% y/y. The number of layoffs fell 0.1 percentage point month on month to 1.1%. Layoffs were higher by up 2.4% y/y.
Construction job openings in October were 227,000, up 51,000 m/m and higher by 31,000 y/y. Hires in construction were 377,000 in October, while separations were 346,000, thus net hiring was 31,000 for the month. Manufacturing job openings in October were 402,000, down 33,000 m/m and higher by 88,000 y/y. Hires in manufacturing were 345,000 in October, while separations were 308,000. Net hiring therefore was 37,000 in October, Table 1.
The labor market is strong. However, the absence of stronger wage growth remain elusive. Average hourly earnings rose 0.2% in November and was up 2.5% y/y. Average hourly earnings have risen by an average of 0.16% and 0.2% over the past three and 12 months, respectively. The lack of wage growth has surprised many including analysts at the Fed which monitors inflation pressure. Wage grow is a key attribute in consideration of possible interest rate adjustments.
At Gerdau, we keep a keen eye on the employment numbers because we have demonstrated that there is an excellent correlation between employment levels and steel consumption. High job creation and low unemployment translate to strong steel demand and vice versa.