The BLS JOLTS (Jobs Openings and Labor Turnover) report came out today.
The BLS claims jobs openings are up. Based on an alternate reports, I suggest opening are not only down, but falling steeply.
The implications are huge, so let’s dive into the discrepancies.
BLS: Job Openings vs. Hires
That’s how the BLS sees things. Before we dive into the alternate view, let’s take a peek at mainstream media analysis.
Mainstream JOLTS Comments
Bloomberg Econoday spins it this way:
Job openings are up but hiring isn’t, in what are mixed but still favorable results from the April JOLTS report. Job openings rose to 5.788 million from a downward revised 5.670 million in March. The job openings rate also rose, up 1 tenth to 3.9 percent. The hiring rate, in contrast, fell a sharp 2 tenths to 3.5 percent in what perhaps confirms anecdotal reports that employers are having a hard time finding qualified applicants for skilled positions. In a separate indication that points to weakness in worker confidence, the quits rate fell 1 tenth to 2.0 percent suggesting that workers are not shopping their skills around to other employers. Back on the positive side, the layoff rate fell 1 tenth to a low 1.1 percent. This report is mixed and embodies what are increasingly mixed signals across employment indicators in general.
Supposedly hiring is down because employers cannot find qualified workers.
How about the fact that part-time employment for economic reasons soared by 468,000? For more grim details, please see Fed Hiking Not: Payroll Jobs +38K, Employed +26K, Labor Force -458K, Revisions -59K.
Beat the Street
CNBC reported 5.8 Million Job Openings in April vs 5.7 Million Expected.
Hooray!
Job Openings – Real Time Macroeconomics
Jon Hartley, Researcher and Policy Analyst for Real Time Macroeconomics see things this way (anecdotes Mish).
Clearly someone is wrong. Who is it?
Red Flag on the US Economy
Please consider the Financial Sense report Real Time Online Jobs Data Continues to Raise a Red Flag on the US Economy.
Following the big jobs miss last Friday, we recently showed that this trend is likely to continue without a turnaround in leading employment indicators.
Another important data point that we’ve been keeping our eye on is online jobs listings, which, as we noted last month, were beginning to plunge and rollover in a manner similar to the last US recession
Our contact is Jon Hartley at Real Time Macroeconomics who previously worked at the Federal Reserve, Dallas Cowboys, and Goldman Sachs Asset Management as a quantitative analyst, economic researcher, and data scientist of sorts.
When we spoke to him a couple months ago on our podcast about his company and using real-time online data for tracking changes in the economy, he said there were some signs of leveling off but no clear red flags just yet.
Since that time, however, the data they track has moved from leveling off to outright decline and Jon just recently emailed us to say he is now “leaning toward forecasting a likely downturn/recessionary scenario” and said, “I don’t think last week’s poor jobs report was just a blip.”
Though the data only goes back around 10 years, it’s clearly rolled over in a manner similar to the last recession. As we noted last month, if the online data is providing a more accurate picture of the US economy vs. the official government surveys, then “expect to see a string of downward revisions” and continued misses moving forward. Last week that prediction was fulfilled quite strongly with only 38,000 jobs added and heavy downward revisions to the two prior months.
We recently spoke with Bob Eisenbeis, Cumberland Advisors’ Chief Monetary Economist and former Executive Vice-President at the Federal Reserve Bank of Atlanta, who made a very interesting observation on our show (airing Wednesday). Given the economic uncertainties currently present (he specifically cited the Great Depression as our closest parallel), forecast errors on government data will tend to be larger than normal.
The big worry, Eisenbeis said, is that US productivity continues to slow, which, as we recently discussed (See Chad Syverson Busts the Labor Productivity Mismeasurement Thesis) , is in all likelihood not a measurement issue, but more structural in nature. Unfortunately, there’s not much that monetary policy can do about this.
Why Believe Hartley?
I asked Cris Sheridan at Financial Sense a simple question: Why believe Hartley?
The answer is found in the May 17 FS report Plunge in Online Job Postings Raises Red Flag.
- The official JOLTS data is collected using a survey and has a smaller sample size.
- Online data may skew towards higher paying white-collar jobs (a forthcoming paper to be provided on this, Hartley noted)
- Real Time Macroeconomics shows only new online job openings whereas JOLTS may include unfilled job postings from prior months.
Given the above, the real-time online data is likely providing a more accurate picture of the US labor market vs. the official survey. Expect to see a string of downward revisions if that’s the case.
Downward Revisions
I have been discussing downward revisions for some time. If they come, revisions are likely to show the US is in recession already.
More and more things simply do not add up.
I have a report tomorrow listing 10 reasons the May jobs report was not an outlier. If you prefer to believe cheerleaders, I have another answer.
Jobs Report Just Noise Says J.P.Morgan
Earlier today ZeroHedge tweeted a comment from JPM. Here’s the conversation.
Whom do you believe?
Also consider Fun with the BLS Birth/Death Model.
Addendum
I received this email clarification from Hartley …
Hey Mish,
On the data, a couple things which I outlined in my last interview with Cris:
- Our figure is a series of “new” job openings, while the BLS JOLTS number is “total” job openings.
- Our data is purely online, whereas BLS JOLTS is offline, which can create specific biases in either series.
- JOLTS uses a small sample size and hence can introduce a lot of noise, whereas our sample size is much larger.
Hope this shines some light on the differences between the series.
Thanks,
Jon
Mike “Mish” Shedlock
April and May are the beginning of the downturn in jobs – “productivity” is down, labour costs are up – and costs are NOT salary to employees only. So, we can expect to see the next shoe drop – revisions will probably take the May report negative, the June report will be slightly negative, the July report at best weak, possibly negative, then August hits – hard. September will be harsh, October more of the same.
Also, in October companies will be getting the health insurance numbers for 2017 – get people off the books starting then.
So job openings are up and the Wizards of Smart at JP Madoff think that’s a good thing without accompanying hires?
Ok so in electrical engineering we deal with voltage and current as very important quantities. On a resistor you apply a voltage and the current is a linear relation to voltage. In this case job openings is the voltage. A stressor applied across the pool of applicants. When you apply the same stressor and get less current flow ( aka hires ) guess what is happening????
Resistance is going up! AKA job market is deteriorating. Bah bah Bahdeep someone is applying the wishful thinking filter!
Perhaps we need to start counting “jobs not lost” again.
Perhaps we need to start counting “jobs not lost” again.
Excellent idea!
To that we need a new category “equivalent jobs created”
https://twitter.com/MishGEA/status/740700816185516032
I’m super confident in this summer of “recovery”.
We are watching fuel prices rise well after oil employment has been crushed. These rising costs compounded on top of higher healthcare expenditures will surely be the “stimulus” we need to continue or trajectory.
Oh noes! I don’t know I can take another “Summer of Recovery!”
The best way to hide the truth is with a plethora of misinformation. Anyone with any sense will realize truth is more subjective than ever. The Internet is an incredible conduit for misinformation.
In this case it is wishful thinking prefabricated for the audience’s mind hoping the fish keep biting a while longer.
As to unemployment the BLS (Bureau of Labor Statistics) has SIX METRICS FOR UNEMPLOYMENT WHICH THEY ALWAYS REPORT and those are U1, U2, U3, U4, U5, and U6. U6 most comprehensively measures unemployment and hows it presently at 10% and the U6 number was the most widely reported metric up through the Reagan years. These days the White House and the press almost always only report the U3 metric which is about half that at around 5%. You can see the OFFICIAL US GOVERNMENT BLS NUMBERS based on each of those unemployment metrics on a monthly basis at:
http://www.bls.gov/news.release/empsit.t15.htm
There are other alternative metrics to calculate unemployment and the most prominent of those is the SGS metric used by ShadowStats which pegs current unemployment at around 23.4% and rising:
http://www.shadowstats.com/charts/employment
There is no way to factually determine unemployment and underemployment with complete accuracy, obviously, as all reports are based on SAMPLING SURVEYS and EXTRAPOLATIONS from those surveys.
As unemployment is defined – true enough.
This whole nonsense about “looking for a job and proving it is idiotic.”
One is either employed, or not employed.
The numbers would be hugely accurate if “not employed” equals “unemployed”
By the way, ShadowStats is a nutcase way off in the other direction.
Mish
It’s worse than that.Look at the last numbers for job creation and you see government jobs as only second to healthcare. Not only do we have millions sucking on the teet of entitlement, but we have millions more working for government actively cultivating more. What would our unemployment rate be if all of the useless government workers were not considered as employed? Or does it matter if their “employment” renders useful goods and services or is simply additional weight added to each true producers back. If it does not matter then we can easily solve the employment problem by simply putting everyone on the gov payroll. When Mark Cuban suggested that Cruz was foolish for suggesting ridding us of the IRS while also claiming that he would enhance job growth, given how many thousands the IRS employed, it highlighted how so many people see “employment” as a commodity number with no qualitative factors. Tens of thousands of IRS employees is a BURDEN to everyone else. There is no service, no product to which any American would voluntarily purchase without a gun to their head, yet people like Cuban see nothing but a metric, a number to be compiled on a spreadsheet. When we include all of the part time jobs on top of the useless eater jobs of government and then all of the entitlement eaters, it’s a wonder there is a bread crust left for us at the end of the day.
Could it be Obama paid a visit to them and strong handed them just like he did in an unprecidented move with the CBO on the ACA numbers?
There is no reason for Obama to strong arm anyone in these bureaucratic offices as the vast majority of them are true believers. If any incentivization were needed it would simply be to provide cover so they would be certain that no repercussions would ever come back on them. After the IRS, Fast & Furious, Benghazi and soon Hillary’s emails, it would require very little reassurance. They are bulletproof, Teflon, UNTOUCHABLE, by any reasonable standard, and as such will produce what numbers and propaganda needed…when needed.
Here’s a data point that fits the JOLTS report. My company has many job openings and there’s good growth in the business and the market segment. The jobs are posted at the US HQ… however the positions are only actually being filled by non-Americans at office locations overseas. There has been an unofficial hiring freeze in the US since at least last year – exceptions made basically only for superstar candidates.
So – job openings in the US, job hiring down.
Here’s a data point that fits the JOLTS report. My company has many job openings and there’s good growth in the business and the market segment. The jobs are posted globally including at the US HQ… however the positions are only actually being filled by non-Americans at office locations overseas. There has been an unofficial hiring freeze in the USA since at least last year – exceptions made basically only for superstar candidates.
Showing zero confidence in the financial sector (Wall Street is an employer!???!!!!!) absolutely has consequences in the “real” world….even in the real world of Far Far Away sad to say.
And lest folks forget “the Government is an employer too” in case anyone had any doubts about the importance of economics.
Trying to set a budget for an entire Federal Agency is almost always left to the girls…and that’s just a fact.
Hate to be seen to be rooting for Count Duku on this one but the points are valid even if the “pointer”(s) has been recommending shorting equities since 666.
The United States is not France circa 1787.
Sadly actually as we have yet to see the proverbial “Barbarians at the Gate.”
“Hardware” something or other got annihilated on the proverbial “no news day” today.
Not the Mongolian Horde…yet…
Obviously not the news folks who talk a good game are looking for tho.
The theory that “oil prices are too low” and “what the recovery needs are higher oil prices” has been found wanting would appear…
Funny to see all the Tesla Haters come out in full force as a consequence though…
WTF? And your point was? You did a good job of hiding it in that babble.
There are plenty of jobs. Just not many full time that pay a good wage.
As per usual the dolts over at ZeroBrains have jumped multiple sharks.
And you get your news from…. where?
ZH is 1000x better than all the MSM (and most web news) put together. Sure, we can disagree w/ some of their POV (nobody’s perfect), but there is no denying that ZH has risen to the top of the non-MSM economic news aggregation category because they earned it… they’ve broken big stories & maintained a steady alternative drumbeat.
There are about 320 million Americans with 102 million of them that are FULLY ELIGIBLE FOR THE WORK FORCE now not working which is around 32% and rising. That is higher than those unemployed at the depths of the so-called very brief Great Depression in the 1930s.
Worst Jobs Report 6 Yrs – 102 Million Americans Jobless
http://theeconomiccollapseblog.com/archives/worst-jobs-report-in-nearly-6-years-102-million-working-age-americans-do-not-have-jobs
America has a huge population of people who are so stupid that they are TOTALLY UNEMPLOYABLE which is why so many of them are unemployed, and those that are aren’t worth a tiny fraction of what they are being paid.
Just go to any Wal-Mart and look at the zoo that represents more than one-third of all Americans with tattoos, piercings, bottoms bigger than elephants, and ask yourself whether you would even vaguely consider employment any of them to do anything.
It makes little to no sense to do any manufacturing of anything in the US when that can be done far less expensively and better in other countries with vastly lower labor costs and vastly more proficient labor.
Hey, we got our RIGHTS! We shouldn’t have to work. We are entitled to healthcare, good food and a decent home…and TV…and internet….and cell phones…and counseling for our insecurities and most definitely a SAFE SPACE where we do not feel threatened by someone trying to give us job.
In the end we will discover in the hardest way that we are not entitled to even a decent burial.
Adam: The old saying “better to stay silent……..etc” applies to you.
Some of our best engineers are overweight and heavily pierced + tattoo’d (not sure if they shop at WalMart). My diesel mechanic is heavy, tattoo’d & pierced.
Sure, these folks may not be bank tellers or game show hosts, but they can & do work jobs (if the jobs are available).
Methinks you are confusing cause & effect… if we still had domestic manufacturing jobs, there wouldn’t be so many overweight/tattoo’d/pierced people walking around WalMart.
JOLTS….ha ha ha! Bureaucrats just LOOOOVVVEEEEE to create these acronyms that spell out something related to what they do-im sure there is a $50,000 a year position in some of the Federal Depts where that is all they do-dream these things up.
The very good Simon Ward thinks it is a temporary slowdown.
http://moneymovesmarkets.com/journal/2016/6/7/us-money-trends-leading-indicator-signalling-growth-rebound.html
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Mish,
I was just reading through a few articles on the productivity slow down and its connection to high tech. It is a matter of measurement, or at least understanding of what to measure. Where are the productivity gains from the internet? Since Facebook is a “free” service for the subscriber and a revenue stream from advertisers for Facebook, the true cost associated with all the social media and apps is reflected in the cost of connection to the internet. Every year or two the cost of connection to the internet as provided by my carrier keeps rising. This would cause much of high tech to be free riders since I doubt Facebook pays charter or any other provider to keep them on their service. And once a website starts to demand paid subscriptions the readership falls off. Hence, I do not believe that the economists understand what is going on. Just like Costco, one has to join in order to have a free lunch when samples are handed out.
Many of those jobs listed and in JOLTS are just propaganda. Many stock analyst go to a company’s web site and look to see how many jobs they have listed. Lots of jobs means confidence and growth which means a buy rating. Let me give you an example. Around 2000 I went out and looked at the GAPS web site. I have a lot of experience in the financial department of a retailer. I was shocked by the number of jobs they had listed for finance. It was more jobs to fill in finance than we had in a multi-billion dollar retailer. Guess what no response on any resumes I sent them. Then a few months later GAP cratered and all those jobs disappeared. Believe nothing!
Correct – pure propaganda.
The revisions – ALWAYS negative – are not widely reported, thus the initial reports themselves are, by definition, propaganda.
The sad thing is that we all (journos included) accept it w/o any thought or challenge whatsoever…
Mish – disagree with you about ShadowStats…
Much of what JW does @ ShadowStats is simply report stats AS THEY WERE CALCULATED IN THE PAST, providing a valuable apples-to-apples comparison to historical norms. Nothing extreme… just washing decades of politics & corruption out of the numbers.
The “unemployment rate” as calculated in 1976 or 1984 or 1996 is VERY different from the “unemployment rate” as calculated in 2016.
I would guess that JW/ShadowStats are in complete agreement w/ you regarding part-time employment & the long-term unemployed, so either you are more “extreme” than you want to admit, or JW/SS is less “extreme” than you claim.
It would appear that George Soros agrees with your opinion on the economy.
Oh No.
Is that a good thing?
Good for your street creds. (Wall street that is)