Job openings in construction near record; job market retightens in manufacturing and in business & professional services where many tech companies are.
By Wolf Richter for WOLF STREET.
We’re looking at this because the Fed is looking at it. Powell mentions it in the FOMC press conferences, because the Fed is looking for signs the labor market is getting less tight, and it got less tight overall – but remains tight. In some industries, it loosened. But in others, it re-tightened, such as in Professional and Business Services, where many tech companies are. In construction, it reached near record-tight. In manufacturing, it started to re-tighten again. That’s what the data shows that the Bureau of Labor Statistics released today as part of its Job Openings and Labor Turnover Survey (JOLTS), which is based on a large survey of employers (and not on internet job postings!!).
Job openings fell in October after the surge in August, but remain very high; the three-month average has been roughly flat for four months in a row and was higher in October than it had been during the summer.
Layoffs and discharges, despite breathless headlines about tech layoffs, are below their pre-pandemic lows. The rate of hiring has normalized, as the number of people who quit jobs has normalized because people have gotten scared after all these breathless layoff announcements, and so fewer people quit, and there were fewer newly vacated jobs that needed to be filled, and churn in the labor market backed off.
Layoffs and discharges remained in the historically low range. In October, 1.64 million workers were let go for whatever reason, up a tad from September, but down from 1.68 million in July and August, and down from the 1.7-1.8 million range in early 2023.
Businesses across the US fire workers for a variety of reasons, and this goes on all the time. When discharges are done for economic reasons, they’re layoffs. During the Good Times in 2014-2019, layoffs and discharges averaged 1.8 million per month. During the Great Recession, layoffs and discharges exceeded 2.5 million at the peak months. In March 2020, they hit 13 million.
We use the three-month moving average to iron out the month-to-month ups and downs and show the trends:
The rate of layoffs as a percent of nonfarm employment in October remained at 1.0%. During the Good Times before the pandemic, it ranged between 1.1% and 1.4%. In other words, the rate of layoffs and discharges in proportion of employment remains well below the lows of the good times:
The number of people who were hired in October dipped to 5.89 million, but was still higher than in July and August. We can now see that the number of hires has normalized, after the hiring boom in 2021 and 2022: In October, it was up by 1.4% from October 2019.
The number of hires is a function of two factors: expanding employment and the number of people who quit or get fired or retire or vanish in some other way, whose newly vacant jobs have to be filled with new hires; more on those voluntary quits in a moment:
Voluntary quits edged down to 3.63 million but was still higher than in July. Over the past four months, quits essentially remained flat, which is a big change from the big ups and even bigger downs since early 2022.
This chart shows the month-to-month changes, not the three-month moving average, which makes the sudden flat spot more visible. Clearly, quits have stabilized – after employers, during the era of the labor shortages, gave the biggest pay raises in 40 years on top of improved benefits and working conditions, in order to hire and retain workers.
Fewer quits means employers have to hire fewer people to fill the newly vacant spots, so that’s good for employers.
But fewer quits also means that natural attrition has slowed, and employers wishing to shed employees through attrition are seeing slower progress than anticipated, and we’ve already heard a few complaints about that suddenly.
Job openings – as reported by companies, not online job postings – fell in October, more than undoing the big surge in August, but were still 19% higher than in October 2019.
The three-month moving average (3MMA), after the high readings in August and September was flat for the fourth month in a row, and was up by 27% from the three-month average over the same period in 2019.
So that’s the trend: job openings, like quits, stabilized at these lower, but still very high levels:
Job openings in major sectors.
Professional and business services is a big category with 22 million employees that can move the needle. It includes some of the tech and social media companies. Others are in the “information” sector or in other categories. The category includes Professional, Scientific, and Technical Services; Management of Companies and Enterprises; Administrative and Support, and Waste Management and Remediation Services.
The job market in this sector has re-tightened. Job openings rose for the third month in a row and were up by 46% from the same period in 2019:
Up by 93,000 in October,
To 1.75 million openings
From 4 years ago: +46%
3MMA: +106,000 to 1.72 million openings
“Information,” a small sector with only 3 million employees, includes companies engaged in web search portals, data processing, data transmission, information services, software publishing, motion picture and sound recording, broadcasting including over the Internet, and telecommunications.
Job openings jumped in October after having plunged in September, after having spiked in July to on of the highest levels in this cycle… (green line in the chart below). Which is why we don’t get too excited about the monthly spikes and plunges, but look at the three-month moving average (red line):
Green: Up by 41,000 in October, after the plunge in September
To 172,000 openings
From 4 years ago: +15%
Red: 3MMA: -30,000 to 166,000 openings.
In Manufacturing, with about 13 million employees, the job market is re-tightening again, with job openings now up by 46% from four years ago.
We just talked about the new and unfilled orders in manufacturing, which had surged in 2021 and 2022 and have since than traced along a high plateau, with some industries seeing continued growth in orders, and other seeing declining orders.
Down by 14,000 in October, after jumps in August and September.
To 587,000 openings
From 4 years ago: +46%
3MMA: +14,000 to 597,000 openings, highest since June.
Construction, with about 8 million employees in all types of construction, has substantially retightened, with job openings up by 32% from four years ago. We discussed the eyepopping boom in factory construction, some of which is slowed by the tight market for construction workers.
Down by a hair in October, after jumps in August and September.
To 423,000 openings
From 4 years ago: +32%
3MMA: +23,000 to 408,000 openings, highest since December 2022, and among the highest in the data:
Healthcare and social assistance, one of the largest sectors with 21 million employees:
Down by 236,000 in October
To 1.49 million openings
From 4 years ago: +27%
3MMA: -74,000 to 1.68 million.
Leisure and hospitality, a big sector with 16 million employees:
Down by 136,000 in October, after the jump in September
To 1.22 million openings
From 4 years ago: +23%
3MMA: unchanged, at 1.27 million and up from the recent lows over the summer.
Retail trade, with 15.5 million employees, part of which has been under relentless pressure from ecommerce for years. Job openings are back to 2015 normal.
Down by 102,000 in October.
To 543,000 openings
From 4 years ago: -36%
3MMA: -57,000 to 613,000 openings.
State & local government, mostly in Education. This is where the teacher shortages were and to some extent still are visible:
Up a hair in October.
To 811,000 openings
From 4 years ago: +22%
3MMA: unchanged at 836,000 openings.
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