The US labor market continues to grow at a blistering pace.
According to the BLS, in July the number of job openings in the US hit a new all time high of 6.939 million, up from an upward revised 6.822 million, and a new all time high.
More importantly, despite recent revisions, July was the second consecutive month in which total job openings surpassed the number of unemployed Americans, which last month declined to 6.28 million. This means that there are 660 thousand more job openings than unemployed Americans who are seeking ajob (how accurate the BLS data is, is another matter entirely).
In other words, in an economy in which there was a perfect match between worker skills and employer needs, there would be zero unemployed people at this moment (of course, that is not the case.)
According to the BLS, the number of job openings increased in finance and insurance (+46,000) and nondurable goods manufacturing (+32,000) but decreased in retail trade (-85,000), educational services (-34,000), and federal government (-19,000). The number of job openings was little changed in all four regions.
Adding to the exuberant labor picture, while job openings remained above total unemployment, the number of total hires also increased to just shy of a new record, rising to 5.679 million in July from 5.677 million in June. Curiously, the one job category that caught the BLS’ attention was the number of hires in finance and insurance, which decreased by -36,000.
According to the historical correlation between the number of hires and the 12 month cumulative job change (per the Establishment Survey), either the pace of hiring needs to drop, or else the number of new jobs will rise significantly in the coming months.
But the biggest surprise in today’s report was the number of quits – the so-called “take this jobs and shove it” indicator – which showes worker confidence that they can leave their current job and find a better paying job elsewhere. According to the BLS, this number hit a new all time high, rising from 3.477MM in June to 3.583MM in July, an increase of 106K in the month, and further confirmation that Americans are increasingly confident in their job prospects should their part ways with their current employer.
Putting all this in in context:
Job openings have increased since a low in July 2009. They returned to the prerecession level in March 2014 and
- surpassed the prerecession peak in August 2014. There were 6.9 million open jobs on the last business day of July 2018.
- Hires have increased since a low in June 2009 and have surpassed prerecession levels. In July 2018, there were 5.7 million hires.
- Quits have increased since a low in September 2009 and have surpassed prerecession levels. In July 2018, there were 3.6 million quits.
- For most of the JOLTS history, the number of hires (measured throughout the month) has exceeded the number of job openings (measured only on the last business day of the month). Since January 2015, however, this relationship has reversed with job openings outnumbering hires in most months.
- At the end of the most recent recession in June 2009, there were 1.2 million more hires throughout the month than there were job openings on the last business day of the month. In July 2018, there were 1.3 million fewer hires than job openings.