U.S. JOLTS data indicates strong fundamentals in labor market

The U.S. Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) gave additional affirmation of a sounder underlying growth in the country, as of July. Total job openings were up to 5.9 million in July. This brought the cumulative rise in openings to 590,000 in 2016. The level of openings surpassed its earlier peak in 2014 and has moved steadily higher since the series started in December 2000. The level of openings shows that jobs are available and signifies tightness in labor market.

The quits rate remained same at 2.1 percent, a pace just 0.1 percentage points lower than the average quit rate at the peak of the last cycle in 2005 and 2006. The quits rate is used to gauge the level of worker confidence in the economy, said Barclays in a research note. The typical worker quits a job only if they feel confident regarding finding a new job or if they are sufficiently economically comfortable to be out of work for some time. On the contrary, the layoff rate declined to the lowest level in the history of the series.

Despite significant fluctuations in headline employment in 2016, the JOLTS data have indicated towards a strong labor market. The JOLTS data is a confirmation of the strong underlying trend seen in labor markets, stated Barclays. Altogether, the higher level of openings, increased quit rate, strong hires and a record low layoff indicate strong fundamentals in US labor market.