Cumberland Advisors Market Commentary – JOLTS and a Sobering View of Labor Market Conditions

Author: Robert Eisenbeis, Ph.D., Post Date: January 15, 2021
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Although the news is somewhat stale, the January 12 release of the BLS’s Job Openings and Labor Turnover Survey (JOLTS) for November provides some additional information about the underlying dynamics of the labor market as we approached the December virus surge. The picture we see reflects some calming in the labor market after a huge surge in the percentage increase of separations in March, as the chart below shows.

JOLTS - rate of hires and separations

After that surge, the percentage increase in new hires again exceeded the rate of separations. In terms of numbers, hires were essentially unchanged at 6 million, while separations increased from 5.1 million in October to 5.4 million in November, suggesting that the labor market might be on the way to recovery. However, there is a long way to go and a huge gap in the number of unemployed versus the number of job vacancies. As the next chart shows, after a period beginning in 2018 when the number of job vacancies exceeded the number of unemployed by a factor of four the number of unemployed has declined significantly but is still some 10.7 million above what it was before the onset of the pandemic.

Unemployed vs Job Vacancies

Additional data on the number of new claims for unemployment insurance suggests an even more sobering view of labor market conditions. These data show that after declining to 782,000 in the last week of December, new claims increased to 784,000 in the first week of January and then jumped to 965,000 last week. These numbers suggest that the trend, as far as the FOMC might be concerned, is not in the direction of achieving the Committee’s employment objectives at the moment. With signs of a surge in the virus and more and more shutdowns being mandated by state and local governments across the country, there is little chance that the FOMC will retreat from its accommodative policy stance any time soon.

Robert Eisenbeis, Ph.D.
Vice Chairman & Chief Monetary Economist
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