US data due Wednesday – JOLTS report a Fed go-to measure of labour market health

The July JOLTS report is expected to show stable job openings at around 8.1 million. However, the ratio of job openings to unemployed seekers could drop to its lowest level in over three years. The Quits Rate, indicating workers’ willingness to leave jobs for better pay, and the hiring rate will be closely watched for signs of weakening labor demand. Despite stable job openings, these details could highlight potential vulnerabilities in the labor market.

(Preview comments are a summary of a Bank of Montreal note)

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And, more background on this data point.

Key Components of the JOLTS Report:

1. Job Openings:

   • This is the total number of job positions that are available but not yet filled at the end of the month. A high number of job openings typically indicates strong labor demand, suggesting that businesses are looking to expand and need more workers.

2. Hires:

   • The hires data reflect the number of additions to the payroll during the month. This metric provides insight into how many people are getting jobs and how businesses are responding to economic conditions.

3. Quits:

   • The quits rate measures the number of employees who voluntarily leave their jobs, often for better opportunities elsewhere. A high quits rate is generally viewed as a sign of worker confidence in finding new employment and can indicate a healthy labor market.

4. Layoffs and Discharges:

   • This component tracks involuntary separations initiated by the employer, such as layoffs or discharges. It gives insight into the level of job loss within the economy.

5. Job Openings to Unemployment Ratio:

   • This ratio compares the number of job openings to the number of unemployed individuals. A high ratio suggests there are more job openings than unemployed people, which can indicate a tight labor market.