I expect the October 2023 jobs report will be so-so. Why? The recent Labor Department monthly Job Opening and Labor Turnover Survey (JOLTS) indicated stagnating labor demand and so did business indicators. The National Association of Business Economists’ mid-October report showed falling sales and fewer incidences of rising sales since July.
Also, JOLTS reported hires were stagnant. The number of job openings changed little at 9.6 million on the last business day of September. And compared to last month, the number of hires and total separations changed little at 5.9 million and 5.5 million, respectively, which means things are about even.
True, the unexpected 4.9 percent growth rate for third quarter GDP shocked economists. But that growth rate may not signal great expectations for super-sized holiday consumer demand. The strong report may partly reflect an oversupply of inventories, which accounted for almost a quarter of the increase.
Take a look at the job leavers share of total unemployed, which complements the quits rate and indicates worker confidence. The job leaver rate in June 2023 was very high at 15.8%. In September 2022, it was also very high at 15.8% and last month, September 2023, a smaller share of the unemployed was job walk-awayers, at just 12.5%. I expect the rate to be about the same tomorrow.
Why does the job leaver share and quits rate matter? Those figures peak right before a recession. (But note President Joe Biden and the Federal Reserve avoided a recession in 2020.) When the economy starts to wane, workers get worried and hang on to their jobs — and they certainly don’t get raises.
I am watching out for the job leavers’ share of the unemployed, the direction of weekly wages increases, and anything else that might attract attention. I don’t think the headline unemployment rates will change much. It might be a dull report.
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