After declines in job openings accelerated in the latter months of 2023, prompting economists to pat themselves on the back for predicting a soft landing and validating their expectations for Fed rate cuts, moments ago the BLS came out and spoiled the big picture when – instead of doing the market’s bidding it confirmed that it responds first and foremost to the Biden admin’s political demands – it reported that in December job openings unexpectedly rose, raising the specter of a hard landing (how can the Fed cut rates when job openings are once again rising).
According to the Biden’s Labor Department, in December the number of job openings unexpectedly rose 101K in December to 9.026MM from an upward revised 8.925MM, meaning that the November print was not the lowest in three years as reported last month but was actually an improvement from October.
According to the BLS, in November job openings increased in professional and business services (+239,000) but decreased in wholesale trade (-83,000).
The modest increase in the number of job openings meant that in December, the number of job openings was 2.758 million more than the number of unemployed workers (which the BLS reported was 6.268 million), up modestly from last month’s 2.662 million.
Said otherwise, in December the number of job openings to unemployed rose to 1.44, a sharp rebound from the November pre-revision print of 1.34 which was the lowest level since August 2021 and almost back to pre-covid levels of 1.3… and then everything was revised.
But what was more interesting than the increase in the number of job openings in December – which we are certain will be revised lower next month as has been the case with everything under the Biden admin – was the number of quits: here we find that the number of people quitting their jobs – an indicator traditionally closely associated with labor market strength as it shows workers are confident they can find a better wage elsewhere – tumbled by 132K to 3.392MM, which is below the 3.4 million level reported in Feb 2020, just before the covid shutdown.
The number of quits decreased mostly in health care and social assistance (-71,000) and in transportation, warehousing, and utilities (-35,000). The number of quits increased in wholesale trade (+63,000).
And just in case some still believe the “Bidenomics” strong jobs lie, the number of hires has also been falling, even though it managed a modest rebound in December, rising by 67K to 5.621 million, also well below the pre-covid levels.
Finally, no matter what the “data” shows, let’s not forget that it is all just estimated, and it is safe to say that the real number of job openings remains still far lower since half of it – or some 70% to be specific – is guesswork. As the BLS itself admits, while the response rate to most of its various labor (and other) surveys has collapsed in recent years, nothing is as bad as the JOLTS report where the actual response rate has tumbled to a record low 32%
In other words, more than two thirds, or 70% of the final number of job openings, is estimated!
And at a time when it is critical for Biden to still maintain the illusion that at least the labor market remains strong when everything else in Biden’s economy is crashing and burning, we’ll let readers decide if the admin’s Labor Department is plugging the estimate gap with numbers that are stronger or weaker.
As for the Fed, now that the strength of the labor market once again takes precedence for Biden’s handlers, Powell is in trouble: how will he justify an even more dovish pivot than the one which sparked the biggest bear market rally in history in December, when the labor market just refuses to crack, when government wages hit record highs every single month, and when supercore inflation has now bottomed and is once again rising, not to mention home prices just hit a new all time high.
Then again, it’s an election year and we are confident that Powell will figure out a way for the no-longer-independent Fed to do just what the White House demands.