JOLTS was stronger than it looked
April’s key figures Survey of Job Openings and Labour Mobility (JOLT) The weaker-than-expected reading was a relief to those who believe a softening labor market will provide the basis for the Fed to cut interest rates this year. But a closer look at the report suggests the labor market may still be too strong to justify a cut.
As of the last business day of April, the number of job openings fell to 8.059 million, down from 8.488 million in the previous month, revised down to 8.355 million. This was well below expectations of 8.4 million. Lower than the most pessimistic predictions On Wall Street.
Most of the decline of 296,000 people Non-cyclical government and peripheral government positionsState and local government job openings fell by 67,000, while education jobs were down by 59,000. Federal government job openings fell by 5,000. Health care and social assistance jobs plummeted by 204,000 jobs. Together, these accounted for 276,000 of the decline.
Another major cause of loss is Information DivisionThere has been a barrage of layoff announcements in the past, with job openings there falling by nearly a third from 152,000 to 109,000 – severe job cuts in the soft tech sector.
The number of job openings in the manufacturing industry is also decreasingup from 546,000 to 516,000. However, it’s important to note that the number of job openings in this field is still very high by historical standards. For example, before the pandemic, there were 393,000 job openings in manufacturing. As the chart below shows, the manufacturing industry is still looking to hire for a very large number of positions.
moreover, Manufacturing employment increases sharply in AprilThe number of job openings fell to 389,000 from 292,000 in February and 291,000 in March, suggesting that the decline in job openings is the result of a large number of previous vacancies being filled, rather than a decline in demand for manufacturing labor.
A similar story can be seen in the leisure and hospitality industry, where new openings fell by 109,000 to 1,084,000. Job openings remain high by historical standardsThe all-time pre-pandemic peak was 1.121 million vacancies in January 2019, and there were just under 1 million vacancies in February 2020, before the pandemic.
The expected slowdown in hiring in the leisure and hospitality industry appears to have started in April, with payrolls falling to 964,000 from 1.038 million in March. Minimum wage increases are very likely suppressing labor demandThe recent minimum wage increase in the fast food industry, particularly in California, has been a game changer. Additionally, leisure and hospitality employment has nearly caught up to its pre-pandemic peak, and the industry is no longer in post-pandemic catch-up mode.
Household sector remains strong
Retail trade, one of the most volatile sectors of the economy, saw job openings and employment growth. Employers still see enough consumer power to increase payrolls..
Strength in the household sector was evident on Tuesday. Factory Order The Commerce Department reports that factory orders rose 1% overall in April, while orders for consumer goods increased 1.2%. Orders for durable goods rose a very strong 2.2% for the month. Compared to a year ago, orders are up 2.6%.
Importantly, these figures are not adjusted for inflation and therefore understate orders. The Consumer Price Index for Durable Goods fell 0.5% in April. Real durable goods orders It probably went up about 2.7%.
This confirms what we saw on Monday. Construction expenditureIn the US, single-family home construction spending increased 0.1% month over month and 20.4% year over year. Note that this represents actual household home purchases, not speculative ones, since home builders spend to build the homes they purchase.
This suggests that the U.S. consumer still has enough juice to keep growth and inflation going. Those who are watching JOLTS and seeing it as a roadmap to a July rate cut are I took the wrong turn.
