Reading the report in full there are some interesting points from the report. Our friend Yohay at Forex Crunch has picked on the strongest part of the report.

“Quits rise to 2.8 million from 2.5 million, highest since April 2008 – good sign for confidence. People who quit jobs usually go for better paying ones.” Yohay wrote in his JOLTS review

The ability to change into a better job is the next stage in the jobs cycle. People feel when they’re in work to look for higher paid/better jobs and it also indicates whether companies are raising wages in either a sign lack of skilled workers or confidence in their business prospects.

Another strong indicator of the report is the growth in employment looking at the Hires vs Separations

More hires than separations obviously means higher employment but the difference has been increasing.

Jolts hires vs separations

Jolts hires vs separations

The increases in the differentials are thus;

JOLTS hires/sep’s vs NFP

  • May 201k vs 229k
  • June 208k vs 267k
  • July 305k vs 243k
  • Aug 212k vs 203k
  • Sep 238k vs 256k

Both sets of numbers highlight the strength we’re seeing in employment, averaging well into the 200k’s in both.

We know all that though, and it’s all good news isn’t it? Maybe not.

The JOLTS report is one watched closely by the Fed but there is an issue that may be making the picture a bit more colourful than it is. An article from a Reuters Breakingviews columnist suggests that the job openings might be overstated by phantom openings

“If there are so many workers, including overqualified ones, to fill the void, why isn’t there more hiring? Part of the answer probably rests with the mechanics of the process, which have evolved significantly. Advertising a job is now practically free. Under government criteria, even a Craigslist post counts as active recruiting. To be considered open, jobs must be ready to start within 30 days, but that doesn’t mean employers must hire in that timeframe.

Postings might linger in cyberspace as choosy companies wait for economic conditions to improve or for the perfect candidate to turn up.”

Lot’s of job openings but no real effort to fill them by employers it seems. Gauging the level of phantom openings is obviously difficult but we shouldn’t doubt that they are there, and it’s yet another reason behind why wages aren’t going up yet. As I’ve pointed out previously it’s still an employers market and that won’t change until the balance shifts to the employee. It’s simple supply and demand. It’s going in the right direction but it seems that companies are holding out for as long as they can before they look to raise costs by raising wages. That also gives us a little clue over the state of business as if they were making good money they would be a little looser on the purse strings.

As many of you suggest, the jobs growth data we see each day/week/month potentially hides what’s really going on underneath the surface. The only problem is that the market is moving on the data, not reality, so we have to trade what we see, not what we know.