Labor Market In Freefall As Job Openings Slide, Quits Tumble To 2 Year Low

For months we have been warning that at a time when the US economy is careening into a hard landing recession, the manipulated, seasonally-adjusted, and politically goalseeked job openings data released as part of the DOL’s JOLTS report is sheer rubbish (see “US Job Openings Far Lower Than Reported By Department Of Labor”; “Handle The JOLTS Data With Care”, “Just Make it Up: Job Openings Unexpectedly Soar As Labor Department Now Guessing What The Number Is”).

And one month after we saw an epic, long overdue thud in the number of artificially-inflated February job openings, today we got yet another confirmation of just how painful the labor market’s reacquaintance with gravity and mean reversion will be.

With consensus expecting only a modest drop in March job openings after the February collapse and sharp downward January revision, what the BLS reported instead was yet another doozy for the third month in a row: in March there were just 9.590 million job openings, the lowest since April 2022, and a drop of 384K from the upward revised February print. Combined with the sharp drops in January (-671K) and February (-589K), the combined three-month drop in job openings was the 2nd biggest on record!

The March job openings number badly missed expectations of a 9.736MM print, and after an unprecedented 27 beats in the the past 29 months, March saw the second consecutive big miss in what now appears will be long and painful series of misses as mean reversion reasserts itself.

According to the BLS, the largest decreases in job openings were in transportation, warehousing, and utilities (-144,000) but increased in educational services (+28,000).

The long overdue plunge in job openings means that there are now just 3.751 million more jobs than unemployed workers, down sharply from last month’s 5.5 million number at the end of 2022, and the lowest since Sept 2021.

Said otherwise, there were just 1.64 job openings for every unemployed worker, down from 1.67 last month and over 2 at the record high in March 2022. Needless to say, this number still has a ways to drop to revert to its precovid levels around around 1.20, but the trend is now clearly lower.

There was a modest silver lining in that after plunging in February (by 327K), the number of hires in March dipped by just 1K to 6.149MM, led by a decline in real estate and rental and leasing (-29,000). 

There was, however, more bad news in the number of quits, or the “take this number and shove it” indicator which shows worker confidence in leaving a job and finding a better paying alternative: in March, the number of quits dropped by 129K to just 3.851 million, the lowest since May 2021. According to the BLS, the number of quits decreased in accommodation and food services (-178,000). There goes upward wage mobility for waiters and dishwashers.

So what to make of this ugly data which as not only UBS, but also the NFIB…

… Opportunity Insights…

… and even Goldman (see “Goldman Expects Nearly 1 Million Drop In Tomorrow’s Job Openings”)…

… have been warning is long overdue?

The answer is simple: while the drop was substantial, the real number of job openings remains still far lower since 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 especially critical for Biden to still maintain the illusion that at least the labor market remains strong when everything else in the senile president’s economy is crashing and burning – not to mention a growing risk of a technical default – we’ll let readers decide if the admin’s Labor Department is plugging the estimate gap with numbers that are stronger or weaker… or rather, if it has been called out so many times by this website and others, that it can no longer pretend all is well.