A Jolt from JOLTS?

June 05, 2024

Throughout history, the state of the domestic labor market has typically served as a reliable indicator of the overall health of the U.S. economy. To that point, while the labor market has remained largely robust in the last few years, the most recent Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics may cause some observers to question the extent to which the employment landscape is deteriorating. Specifically, job openings in the U.S. decreased in April for the second consecutive month according to the report, falling by roughly 300,000 to just over 8 million. This figure represents the lowest level since February 2021 and equates to just over 1.2 job openings per unemployed individual (down from 1.3 in March). As can be seen in this week’s chart, April’s drop is part of a gradual decline in job openings that has been taking place for nearly two years. Interestingly, the rate at which individuals are voluntarily leaving jobs remains at a multi-year low, which could indicate a lack of confidence among labor market participants regarding the prospects of finding more attractive employment elsewhere. Not all of the April JOLTS data was negative, however, as the report stated that layoffs were unchanged on a month-over-month basis and remain low relative to historical averages.

Slowing job growth could indicate a weaker domestic economy, which makes the job of the Federal Reserve more challenging given its commitment to higher rates to combat elevated inflation. While the April JOLTS figures will likely not lead to a rate cut at next week’s FOMC meeting, further softening in the labor market could lead the central bank to weigh the employment picture more heavily when making policy decisions. Marquette will continue to monitor the impact of inflation and labor market dynamics on Fed policy and provide updates to clients accordingly.

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