May JOLTS: Froth skimmed off
|Summary
May's JOLTS report showed a labor market that in many ways looks like its pre-pandemic self. Job openings partially rebounded from the three-year low hit in April, but the number of job openings per unemployed worker remained unchanged at 1.22, essentially back in line with its 2019 average. Turnover, meanwhile, remains depressed. Gross hiring stayed near the lowest share of total employment since 2015, and businesses are reluctant to cut ties with existing workers as indicated by the layoff & discharge rate remaining near a historic low at 1.0%. The share of workers quitting their job also remains below the rate registered prior to the pandemic, which, along with the downward trend in demand for new workers, should continue to temper wage growth.
Overall, the JOLTS data suggest that the jobs market continues to move toward its pre-pandemic state, but at a pace that warrants caution more than alarm. The resumption of inflation's downward trend in recent price data along with the reduction in inflation pressures stemming from the cooler jobs market leads us to continue to look for the Fed to reduce the fed funds target range as early as its September 18 meeting.
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