Job Openings and Labor Turnover

Labor Market Hesitant as Fiscal Uncertainty Looms

  • Job openings remained little changed from August at 3.56 Million

  • Total separations fell 7.6%, led by a 11.6% decline on the government side

  • JOLTS data reflecting weaker conditions than the latest payroll reports

The Job Openings and Labor Turnover Survey (JOLTS) for September showed signs of a restrained labor market as firms await some sort of fiscal lucidity before they start to alter their employment situation. Alathough job openings have been on a jumpy but visible rise since 2009, September's figures showed a slight contraction, with levels down 2.7% to 3.56 million. This decline was fueled mostly by fewer openings in manufacturing, professional and business services, and government. Out of the four regions in the report, the Midwest was the only one to post positive movement in the job openings rate, up from 2.5% in August to 2.8% in September. The Southern region of the US actually saw a significant drop in the openings rate, down to 2.6% from 2.9% in the previous month. With companies less inclined to hire, the positions available since the beginning of the year are slowly being filled, with no better understanding of how the fiscal cliff will turn out as we get closer to year end. Despite this uncertainty hanging over the business outlook, nonfarm payroll growth has gained momentum in the past few months and could hint at stronger JOLTS reports as we close out 2012. September's JOLTS report, however, noted a 5.7% decline in hiring to mark the largest monthly drop in more than a year, led mostly by a decline on the government side. Construction however, showed moderate gains in hiring as the housing market recovers and construction firms take on more workers to strengthen their leaner operations. Private industries such as professional and business services are more inclined to hold off and remain lean until the situation improves and more fiscal certainty gives the green light for business to hire. Total separations declined significantly in September, reflecting a decline in both layoffs and quits for the month. Overall, the numbers point to fewer separations for most sectors except construction which rose moderately and offset its gains in hiring, surprisingly. Aside from a 17.0% jump in separations in the recreation sector, every other industry shed fewer employees in September than in August. The report, therefore, stresses a respite in the labor market as the fiscal cliff nears and companies choose to wait until a conclusion arrives before they move on altering their largest expense, workers.