Job Openings Growing, Hiring Does Not: What We Learned During the Week of June 6 – 10

There are many jobs openings on the market. Unfortunately, employers are not filling those positions. Here are the 5 things we learned from U.S. economic data released during the week ending June 10.

#1Employers have many job openings but are not having success finding workers to fill those jobs. The Bureau of Labor Statistics estimates there were a seasonally adjusted 5.788 million job openings at the end of April, an increase of 118,000 from March, up 3.7% from a year earlier and at a post-recession high. Private sector employers were seeking to fill 5.289 million positions at the end of April, up 4.1% from a year earlier. Industry segments with the largest year-to-year percentage increases in available jobs included wholesale trade (+40.3%), manufacturing (+23.1%), construction (+17.1%), and retail (+16.4%).

But it appears that 061016companies are having difficulty finding workers to fill these positions as hiring slowed by 198,000 in April to 5.092 million jobs. This was up a mere 0.4% from April 2015 and was the softest pace of hiring in 2 years. Private sector hiring was at 4.743 million jobs, up 0.3% from a year earlier. Sectors with the biggest year-to-year percentage gains in hiring were education services (+28.8%), manufacturing (+7.5%), and accommodation/food services (+6.2%). While separations slipped by 108,000 during the month to 4.988 million people, the count of voluntary quits was up 8.6% from a year earlier at 2.912 million. An increase in the number of people voluntarily leaving their jobs is indicative of a labor force that is optimistic about their job prospects. Also positive is the continuing trend of slow layoff activity—more on that below.

#2Productivity slowed during the 1st 3 months of 2016. The Bureau of Labor Statistics reports that nonfarm business labor productivity (output per hours worked) dropped 0.6% during Q1 of this year. This is a revision from the initial Q1 productivity report that had shown a 1.0% decline. This was the 2nd straight quarter of declining output per hours worked. Output increased by only 0.9% during the quarter while the number of hours worked grew 1.5%. Perhaps a signal of some future inflationary pressure is that unit labor costs jumped 4.5% during the 1st 3 months of 2016 thanks to a 4.2% gain in real hourly compensation. Manufacturing labor productivity increased 1.3% during Q1, with nondurable goods productivity up 4.2% while durable goods productivity declined 0.6%. Versus a year earlier, nonfarm business labor productivity grew a feeble 0.7% as a 2.3% increase in output came from a 1.6% increase in the number of hours worked.

#3Consumer took on more debt again in April, albeit at a slower pace. The Federal Reserve estimates outstanding consumer credit balances (not including real estate-back loans) expanded by $13.4 billion during the month to $3.602 trillion. This was up 6.2% from April 2015, its smallest 12-month comparable in more than 2 years. Outstanding revolving credit balances (e.g., credit cards) grew by $1.6 billion (its smallest month-to-month increase since January) to $951.5 billion. This was up 1.7% from a year earlier. Non-revolving credit balances—including loans for college and vehicle purchases—expanded by $11.8 billion to $2.650 trillion, representing a 6.5% increase since April 2015.

#4Wholesalers added to their inventories for a 2nd straight month in April. Inventories at merchant wholesalers grew 0.6% during the month to a seasonally adjusted $587.9 billion. This was 0.9% above year ago levels for the Census Bureau data series. Inventories of durable goods grew 0.2% to $355.0 billion, led by increases for lumber, machinery, electrical equipment, and hardware. Durable inventories remained 1.8% below year ago levels. Nondurable inventories expanded 1.3% during the month to $232.9 billion, with greater than 1 percent inventory gains for farm products, drugs, and apparel. Nondurable inventories have grown 5.5% since April 2015. The inventory-to-sales (I/S) ratio slipped a basis point to 1.35. A year earlier, the I/S ratio was at 1.31.

#5Even though hiring remains uneven, employers are keeping layoff activity in check. The Department of Labor estimates that there were a seasonally adjusted 264,000 1st time claims made for unemployment insurance benefits during the week ending June 4th, down 4,000 claims from the week before and 13,000 from the same week in 2015. 1st time jobless have been below 300,000 for an absolutely impressive 66 consecutive weeks and for 88 of the past 91 weeks. In fact, 1st time claims were once again approaching the post-recession lows that we were seeing back in February and March.

Other data released over the past week that you might find of interest:
CoreLogic Home Price Index (April 2016, Single-Family Home Index, seasonally adjusted): +1.75% vs. March 2016, +6.15% vs. April 2015.
University of Michigan Index of Consumer Sentiment (June 2016-preliminary, Index: 100 = 1966Q1, seasonally adjusted): 94.3 (down  4/10ths of a point from May 2016, down 1.8 points from June 2015).

The opinions expressed here are not necessarily those of Kevin’s current and previous employers. No endorsements are implied.

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