Job Openings, Hiring Fell in May

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Hiring in May FELL 4.4 percent from its record-setting April pace to 5.73 million
  • Job openings at the end of May FELL 0.7 percent (49,000) to 7.32 million;
  • The ratio of job openings per unemployed SLIPPED to 1.24 in May from 1.27 in April.

Trends:

  • Job openings exceeded unemployed for the 15th month in a row;
  • Job openings fell in May for the second straight month, the first back-to-back monthly declines since December 2016-January 2017;
  • The ratio of “quits” to layoffs and discharges remained at 2:1 signaling continued confidence in the labor market.

Data Source: Bureau of Labor Statistics

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The Bureau of Labor Statistics provided a belated explanation for the surprise drop in jobs in its May Employment Situation report in the most recent Job Openings and Labor Turnover Survey. The JOLTS report detailed a sharp drop in hiring in May, the same month in which, according to the BLS, the nation’s economy added a surprisingly low 72,000 jobs.

The drop in hiring – down 4.4 percent from April – was the steepest month-month decline since January 2016 when hiring fell 6.0 percent from December 2015. That said, the nation remains on a pace for more hires in 2019 than in 2018: 69.4 million, up from 68.9 million in 2018.

Not only do the overall JOLTS numbers show more job openings than unemployed, but every major industry grouping shows a similar phenomenon underscoring the oft-discussed skills mismatch which is keeping some people in the ranks of the unemployed.

Most notably, there are 4.6 openings per unemployed in the professional and business services sector and 3.1 unemployed per job opening in trade jobs, both wholesale and retail. The latter suggests business-(almost)-as-usual despite the ongoing trade war as the Trump Administration continues to use tariffs as a foreign policy tool.

One of the more encouraging but least explicable data elements according to the JOLTS report was an almost 20 percent jump in construction job openings. The spike came as the number of unemployed construction workers fell by a third from April to May: 439,000 down to 294,000 despite the falling residential building permits and starts.  From April to May the number of single-family housing starts dropped 0.9 percent; year-year single-family housing starts were down almost five percent.

In the “good news” department, the number of job openings in the manufacturing sector jumped to 509,000 in May, the highest level since publication of JOLTS data began in December 2000

If there is any worrisome sign in the May JOLTS data it comes from the drop in the number of job openings: the third month-month drop in the first five months of this year, matching the number of month-month declines in all of 2018.

You can hear Mark Lieberman on P.O.T.U.S Morning Briefing (Sirius 124) every Friday at 6:20 am Eastern Time. Follow him on Twitter at @foxeconomics.

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