September JOLTS Report Suggests Continued Labor Market Cooling
September JOLTS Report Suggests Continued Labor Market Cooling
Hires ticked up, according to today’s JOLTS Report, but the slide in job openings and quits, paired with the spike in layoffs, signal a labor market which likely continued to soften, despite the stronger-than-expected headline numbers in the September Jobs Report.
Three highlights of the report:
The labor leverage ratio dipped below its pre-Covid level for the first time since the pandemic recession. The labor leverage ratio (that is, the ratio between employee-initiated quits and employer-initiated terminations) peaked at 3.42 during the pandemic recovery, but has now fallen below the February 2020 level of 1.77 to 1.68. By that measure, workers have now seen half their leverage erode.
Quits have fallen below the pre-Covid threshold of 60% as a share of all separations. Almost 73% of all separations were employee-initiated quits with just one in five being employer-initiated terminations at the peak of the pandemic reopening, but employers are increasingly calling the shots now.
Layoffs and discharges hit a record low in state and local government, outside of education. In the last three months, all net job gains came from just four supersectors—education & healthcare, government, leisure & hospitality, and construction. All four categories saw declines in job openings in September, which suggests that underlying demand for labor may be cooling in those sectors too. But labor market conditions remain better than in most other sectors, with layoffs and terminations in local government agencies hitting an all-time low in September.
Overall, the report will caution the Fed against overreacting to recent rosy jobs data by prematurely moving away from its rate-cutting path when it meets next week.
Some caveats are in order: Today’s figures may partly reflect the effects of Hurricane Helene and the Boeing strike. Specifically, hires may be temporarily depressed and layoffs overstated.
Take a tour through the JOLTS report in ZipRecruiter charts.
