So much for Goldman’s expectation – not to mention every 3rd tracking service – that today’s JOLTS report would finally tumble and reflect the reality observed by services such as Indeed and Opportunity Insights, both of which have seen a sharp drop in job openings.
Moments ago the DOL reported that in January (as a reminder JOLTS is always one month delayed vs payrolls), the US had 10.824 million job openings, which while a 410K drop from an upwardly revised 11.234MM in December (vs the 11.0MM pre-revision print), was not only well above the consensus estimate of 11.546MM but the drop was tiny compared to Goldman’s expectation for an 800K drop in the number of job openings.
This was the fifth consecutive beat of expectations in the series, and an unprecedented 27 of the past 29 prints (!), just another garden variety ten-sigma event by the “never political” BLS.
According to the BLS, in December, the largest decreases in job openings were in construction (-240,000), accommodation and food services (-204,000), and finance and insurance (-100,000). The number of job openings increased in transportation, warehousing, and utilities (+94,000) and in nondurable goods manufacturing (+50,000)
The modest drop surge in job openings means that there are now 5.13 million more jobs than unemployed workers, which is not that far off from the all time high of 6.055 million in March 2022.
Said otherwise, there were 1.90 job openings for every unemployed worker, down from a near record 1.96 last month. Needless to say, this number has a ways to drop to revert to its precovid levels around around 1.20…
One place where the labor market appeared to be showing modest weakness was in the number of quits, traditionally seen as a “take this job and shove it” indicator as it reflects confidence in finding a better paying job elsewhere: in january, the number of quits tumbled by 207K – the biggest drop since May 2021 – to 3.884MM, the lowest level since June 2021.
So what to make of this ‘data’ which as not only UBS, but also the NFIB…
… Opportunity Insights…
… and even Goldman now (see “Goldman Expects Nearly 1 Million Drop In Tomorrow’s Job Openings“)…
… discredit as fake news?
The answer is simple: well over half of it – or some 70% to be specific – is guesswork. As the BLS itself admits, while the response rate to most of its various labor (and other) surveys has collapsed in recent years, nothing is as bad as the JOLTS report where the actual response rate has tumbled to a record low 31%
In other words, more than two thirds, or 70% of the final number of job openings, is estimated!
And at a time when it is critical for Biden to maintain the illusion that the labor market remains strong when everything else in Biden’s economy is on the verge of recession, we’ll let readers decide if the admin’s Labor Department is plugging the estimate gap with numbers that are stronger or weaker.
As for the Fed, the number was clearly hot (i.e., “labor market remains strong, thank the president), and the only dovish twist was the big drop in quits, although as Bloomberg notes, “that’s a pretty slender thread on which to hang a “dovish Fed” narrative,” and the market’s view shouldn’t really change much at all ahead of the big payroll and CPI reports, which will likely determine the Fed’s decision in two weeks.