This week it was the time for the Bureau of Labor Statistics in the United States to release the JOLTS (Job Opening and Labor Turnover) for April 2020. While considered by many a second-tier economic release out of the United States, it is closely watched by traders monitoring the jobs market and what the Fed does to fulfill its mandate of maximum employment.
The data was particularly important in light of the historic NFP number last Friday. Although yesterday’s JOLTS referred to the month of April, it helps to understand the labor market conditions prior to the May NFP.
Almost One Million Fewer Jobs Openings in April
The enthusiasm created by last Friday’s May NFP data (the largest increase in the number of jobs since the data is tracked) disappeared quickly – the FX market gave back all the gains and some more. USDJPY, EURUSD, GBPUSD, AUDUSD – they all reversed last Friday’s gains as it became obvious the data had multiple errors when compiled.
Therefore, the focus shifts to second-tier employment data to shed light on the real state of the US labor market. On the last day of April, the number of job openings declined to 5 million, with the job opening rate coming little changed at 3.7%. The largest declines were registered in retail trade, health, and social assistance, but also in professional and business services.
However, the number of job openings rose in goods-producing industries, like manufacturing and construction, confirming that the reopening first began with the two sectors. However, any enthusiasm should be tempered as the job openings are down 28% over the last two months, showing the challenges caused by the coronavirus pandemic. As a comparison, it took eighteen months for job openings to reach a similar decline during the 2008-2009 Great Financial Crisis.
Once again, traders must take the data with a grain of salt. The COVID-19 pandemic influenced the way the data is collected and affected the response rate – in April, the rate fell to 44% from an average of 54% prior to the pandemic.
All in all, over the last twelve months that ended in April 2020, the net employment loss amounted to 13.9 million, including people that may have been hired or lost their jobs more than once during the year.
When the number of hires is less than the ones that lose their jobs (separations), employment declines. Until that reverses, the Fed will have a hard time to reverse the course and reach its maximum employment mandate.