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JOBS DOWN-CHURN: JOLTS REPORT HINTS AT DAMPENING LABOR MARKET

The Labor Department's Job Openings and Labor Turnover Survey (JOLTS) USJOLT=ECI is a tool that measures labor market churn. Healthy churn suggests businesses are hiring and firing and workers are willing to leave jobs for better opportunities.

Healthy churn is a symptom of a robust economy, chugging along.

In Tuesday's JOLTS release, job openings unexpectedly surged by 10.6% in April to 7.618 million. But Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, suspects the jump in openings could be illusory.

"Openings in the professional and business services sector reportedly leapt by 668K to 1,715K, driving nearly all of the increase in overall openings," Tombs writes. "But our first chart shows that sharp drops in openings in this sector in previous months have been revised away as more data have been collected."

Economists expected the number to be essentially unchanged, at 6.880 million.

The report also showed hires fell by about 7.6% and layoffs and discharges (firings) slid by 10.2%. That supports the widely held view - supported by months of low initial jobless claims - that the jobs market is idling in low-hire, low-fire mode.

Meanwhile, quits tumbled by 5.8%.

The quit rate - a metric often associated with consumer expectations - dipped from 2.0% of the workforce to 1.9%, suggesting workers are less willing to walk away from a gig amid a softening jobs outlook and economic uncertainty.

"With the quits rate and the layoff rate ticking down in April, neither employees nor employers are in a hurry to make moves," says Matthew Martin, senior U.S. economist at Oxford Economics. "The US/Israel-Iran war will test the labor market. Weaker household spending and uncertainty are likely to influence firms' hiring intentions."

The pullback in hiring at a time when economic and geopolitical clouds loom on the horizon echoes the downward trend in jobs confidence, as expressed by the Conference Board. Falling jobs confidence could discourage workers right out of the labor force.

April's employment report showed labor market participation slid to 61.8% of the workforce, the weakest print since November 2021, when the economy was clawing its way out of the COVID abyss.

The JOLTS report is one of several bits of labor market data expected this week - which also includes ADP's National Employment Report, Challenger layoffs, and weekly jobless claims - all of which will set the table for the Labor Department's May employment report.

Analysts predict that report to show the U.S. economy added 85,000 jobs last month, with the unemployment rate standing pat at 4.3%.

Here's a look at actual payrolls numbers versus consensus.

It shows that, after revisions, the actual number fell short of estimates eight times over the past year. In the last 12 months, half of those fell short of predictions by 50,000 or more.

(Stephen Culp)

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