– February 11, 2020

The latest Job Openings and Labor Turnover Survey from the Bureau of Labor Statistics shows the number of open positions in the private sector fell to 5.739 million in December (see top chart). Total job openings dropped to 6.423 million. Private-sector openings are down in eight of the past thirteen months since the peak in November 2018, a drop of 1.223 million or 17.6 percent.

The private-sector job-openings rate, openings divided by the sum of jobs and openings, was 4.2 percent, down from 4.5 percent last month and a peak of 5.2 percent in November (see top chart). These results are before the strong job gains for January reported by the Bureau of Labor Statistics on Friday February 7. Though the level of openings remains high by historical comparison and the labor market remains very tight, the downward trend in job openings suggests some pressures in the labor market may be easing slightly.

The industries with the largest number of openings were professional and business services (1.18 million), health care (1.09 million), leisure and hospitality (969,000), and retail (698,000). The highest openings rates were in leisure and hospitality (5.4 percent), professional and business services (5.2 percent), and health care (5.0 percent).

While private-sector openings declined, private-sector layoffs rose in the latest month. Layoffs rose slightly to 1.82 million from 1.67 million in the prior month. The layoffs rate ticked up to 1.4 percent. Though slightly above the all-time low of 1.2 percent, it is well below the 2.3 percent peak rate in 2009. The low layoffs rate is consistent with the multidecade-low level of initial claims for unemployment insurance.

Quits by private-sector employees ticked down in December, dropping to 3.30 million from 3.38 million in November (see bottom chart). The quits rate also ticked down, falling to 2.5 percent from 2.6 percent last month and just below the record high of 2.8 percent from 2001 (see bottom chart).

Overall, the data relating to the labor market are still relatively strong by historical comparison, but job openings have shown significant deterioration in recent months. The weakness may be a sign that employers are getting a bit more cautious. Still, attracting and retaining qualified labor is likely to remain a critical issue for business for the medium term.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.

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