Near Record 5.6 Million Americans Were Hired In October, Most In Over 16 Years

After a burst of record high job openings which started in June and eased modestly in August, today"s October JOLTS report  - Janet Yellen"s favorite labor market indicator - showed a sharp drop in job openings across most categories now that hurricane distortions have cleared out of the system, with the total number dropping from 6.177MM to 5.996MM, well below the 6.135MM estimate, the biggest monthly drop and the lowest job openings number since May, resulting in an October job opening rate of 3.9% vs 4% in Sept.

After nearly two years of being rangebound between 5.5 and 6 million, the latest drop in job openings despite the alleged improvement in the economy is another inidication that an increasingly greater number of jobs may simply remain unfilled in a labor market where skill shortages and labor imbalances are becoming structural.

The number of job openings was down for total private and was little changed for government. Job openings increased in accommodation and food services (+94,000), construction  (+48,000), and real estate and rental and leasing (+40,000). Job openings decreased in wholesale trade (-90,000), finance and insurance (-47,000), information (-32,000), and nondurable goods manufacturing (-26,000). The number of job openings was little changed in all four regions. Now if only employers could find potential employees that can pass their drug test...

One notable change in this report was that despite the sharp drop in job openings, the number of hires in October soared by 232K to 5.552MM in October, the highest since March 2001, and further reducing the hiring rate from 3.8% to 3.6%. At the industry level, the number of hires increased in other services (+55,000) and health care and social assistance (+45,000). Hires decreased for state and local government, excluding education (-32,000). The number of hires increased in the Northeast region.

On an annual basis, the pace of hiring spiked in October, rising from 2.7% Y/Y in Sept., to 6.8% in October, the highest since February 2016.

The other closely watched category, the level of quits - which indicates workers" confidence they can leverage their existing skills and find a better paying job - was unchanged in October, and was identical to the 3.18MM quits in September, suggesting little change to worker confidence about demand for their job skills. The number of quits was little changed for total private, for government, and in all industries. In the regions, the number of quits increased in the South and decreased in the Midwest.

And with a total 5.2 million separations (a 3.5% rate), this means that there were 1.6 million layoffs and discharges in October, little changed from September. The layoffs and discharges rate was 1.1 percent in Oct. The layoffs and discharges level increased in finance and insurance (+37,000) and in mining and logging (+7,000). Layoffs and discharges decreased in construction (-69,000) and in state and local government, excluding education (-15,000). The number of layoffs and discharges decreased in the Northeast region.

Putting all the data in context:

• Job openings have increased since a low in July 2009. They returned to the prerecession level in March 2014 and surpassed the prerecession peak in August 2014. There were 6.0 million open jobs on the last business day of October 2017.


• Hires have increased since a low in June 2009 and have surpassed prerecession levels. In October 2017, there were 5.6 million hires.


• Quits have increased since a low in September 2009 and have surpassed prerecession levels. In October 2017, there were 3.2 million quits.


• For most of JOLTS history, the number of hires (measured throughout the month) has exceeded the number of job openings (measured only on the last business day of the month). Since January 2015, however, this relationship has reversed with job openings outnumbering hires in most months.


• At the end of the most recent recession in June 2009, there were 1.2 million more hires throughout the month than there were job openings on the last business day of the month. In October 2017, there were 444,000 fewer hires than job openings.

Finally, and perhaps most notably, the Beveridge Curve (job openings rate vs unemployment rate), appears to be gradually normalizing after a nearly decade-long "drift" from its conventional pattern. From the start of the most recent recession in December 2007 through the end of 2009, the series trended lower and further to the right as the job openings rate declined and the unemployment rate rose. In October 2017, the unemployment rate was 4.1 percent and the job openings rate was 3.9 percent.

JOLTS: Hiring Slides To Lowest In 6 Months As Job Openings Remain Near All Time High

After a burst of record high job openings which started in June and eased modestly in August, today"s September JOLTS report  - Janet Yellen"s favorite labor market indicator - showed another modest increase in job openings across most categories in the hurricane-affected month, with the total number rising fractionally 6.090MM to 6.093MM, above the 6.091MM estimate, resulting in an unchanged Sept. job opening rate of 4%. Still, after nearly two years of being rangebound between 5.5 and 6 million, the latest job openings number confirms that there may be a "breakout" about what was the previous resistance level, as increasingly more jobs remain unfilled in a labor market where skill shortages and labor imbalances are becoming structural.

The number of job openings was little changed for total private and for government. Job openings increased in professional and business services (+156,000), other services (+52,000), state and local government education (+36,000), and federal government (+15,000). Job openings decreased in accommodation and food services (-111,000) and information (-28,000). The number of job openings was little changed in all four regions. Now if only employers could find potential employees that can pass their drug test...

Comment on the impact from the hurricanes, the BLS said that "Hurricane Irma made landfall in Florida during September, the reference month for the preliminary estimates in this release. All possible efforts were made to contact and collect data from survey respondents in the hurricane-affected areas. A review of the data indicated that Hurricane Irma had no discernible effect on the JOLTS estimates for September."

One notable change in this report was the sharp slump in hiring, which declined by 147K to 5.273MM in September, the lowest month since April, and further reducing the hiring rate from 3.7% to 3.6% percent.

On an annual basis, the pace of hiring slowed down once again, declining to 1.8% in Sept. from 2.5% Y/Y in August, down from 3.6% in July.

The other closely watched category, the level of quits - which indicates workers" confidence they can leverage their existing skills and find a better paying job - reversed last month"s declined, and in Sept. rose from 3.093 MM to 3.182MM, suggesting workers were feeling just a little more confident about demand for their job skills than the previous month. The number of quits was little changed for total private and for government. Quits rose in  professional and business services (+82,000) and state and local government, excluding education (+10,000). Quits fell in other services (-45,000) and real estate and rental and leasing (-16,000).

And with a total 5.2 million separations (a 3.6% rate), this means that there were 1.7 million layoffs and discharges in September, unchanged from August. The layoffs and discharges rate was 1.2 percent in Sept.  The number of layoffs and discharges was little changed for total private and for government. The layoffs and discharges level decreased in wholesale trade (-30,000) and mining and logging (-7,000). The number of layoffs and discharges was little changed in all four regions.

Putting all the data in context:

• Job openings have increased since a low in July 2009. They returned to the prerecession level in March 2014 and surpassed the prerecession peak in August 2014. There were 6.1 million open jobs on the last business day of September 2017.


• Hires have increased since a low in June 2009 and have surpassed prerecession levels. In September 2017, there were 5.3 million hires.


• Quits have increased since a low in September 2009 and have surpassed prerecession levels. In September 2017, there were 3.2 million quits.


• For most of JOLTS history, the number of hires (measured throughout the month) has exceeded the number of job openings (measured only on the last business day of the month). Since January 2015, however, this relationship has reversed with job openings outnumbering hires in most months.


• At the end of the most recent recession in June 2009, there were 1.2 million more hires throughout the month than there were job openings on the last business day of the month. In September 2017, there were 820,000 fewer hires than job openings

Finally, and perhaps most notably, the Beveridge Curve (job openings rate vs unemployment rate), appears to be gradually normalizing after a nearly decade-long "drift" from its conventional pattern. From the start of the most recent recession in December 2007 through the end of 2009, the series trended lower and further to the right as the job openings rate declined and the unemployment rate rose. In Sept 2017, the unemployment rate was 4.2% and the job openings rate was 4.0%.

Sears Canada Pays Execs Bonuses While Laid-Off Workers Get No Severance

After filing for bankruptcy protection in an Ontario court last month, Sears Canada said Friday that it plans to dole out big bonuses to senior management while the retailer trudges through a painful restructuring, even as thousands of laid-off workers aren"t being paid promised severance.

According to court documents, Sears - which promised to close 59 stores and eliminate 2,900 jobs across the country as part of a court-supervised restructuring process - will pay up to $7.6 million in retention bonuses to 43 executives and senior managers at the company"s head office in Toronto – the same management team that lead the company as sales plummeted and it spiraled into insolvency. As CBC News reports, that works out to an average of $176,744 per employee, although it"s unlikely the money will be divided up so evenly.

Meanwhile, the company said it won"t be paying lower-level employees a severance, which could equate to a loss of tens of thousands of dollars per person. Predictably, the news isn"t going over well with the company"s laid-off workers.

"Why aren"t they able to pay us out the severance if they have this [bonus] money?" says Zobeida Maharaj, a laid-off senior operations manager who spent 28 years working for Sears in the Toronto area.

"They have no moral values, no compassion, nothing in their hearts."

Sears argues that the hefty paydays are necessary to keep the management team from jumping ship as the company restructures.

Sears Canada points out that the bonus payments — known as the Key Employee Retention Program (KERP) — have been approved by the Ontario Superior Court. Offering cash incentives during restructuring is common and often necessary to retain key employees, the company said.

"A lack of a KERP in this scenario would potentially result in a worse outcome and negatively impact a variety of stakeholders," spokesperson Joel Shaffer told CBC News.

In a revelatory twist, the managers who guided the company into bankruptcy stand to profit handsomely by doing so; many could reap enormous bonus payments beyond those mentioned above, including incentive-based payoffs, if they can bring the company through bankruptcy intact.

“The executives and senior managers tasked with guiding Sears through the restructuring will earn up to an additional 25 per cent to 100 per cent, on top of their base salary.

Most will get their bonuses in quarterly installments, receiving 75 per cent of their payments within six months. The final 25 per cent won"t be paid out until a successful restructuring is complete.

Sears also plans to pay retention bonuses of up to $1.6 million to 116 senior store employees who will oversee liquidation sales at locations that are closing. That amount works out to an average of $13,793 each and will be contingent on certain sales targets.”

But try explaining to recently unemployed Sears workers why the compay should be allowed to pay out these bonuses before the severence payments promised to them and thousands of their peers.

[Zobeida ] Maharaj says she can understand paying retention bonuses to store employees working on the front lines. But she argues the big payouts to higher-ups at head office are unfair when ex-workers like her have lost their severance.

"I"m shocked as to how they got this grant permitted to have these people — these headquarters [big-wigs] — fill their pockets even more on the suffering of Sears employees," says Maharaj. "We"re just the little ants at the bottom."

Rosa Dalessandro also wonders why there"s money to pay Sears executives when she"s losing severance that amounts to about a year"s salary.

"It"s very upsetting," says the former Toronto-based sales manager, who worked for the company for 20 years.

Dalessandro was laid off in March and Sears cut off her severance payments last month. This week, the retailer also cut her benefits and she got hit with an unexpected $400 dental bill.

"I"m opening all the bills right now and I"m like, "Wow, wow, wow," because you don"t have money coming in. It"s really affected me and my family," says Dalessandro.

"It"s almost like what they took from us, they"re giving to the executives downtown."

Sears management argues that the bonuses are necessary to ensure that important employees stick around to help rebuild the company as it struggles through bankruptcy.

While it may sound "cold and heartless" to some workers, putting money aside to keep key employees is considered a prudent move, says employment lawyer Adrian Ishak. "These KERPS are a necessary evil."

When a company is insolvent, Ishak explains, creditors line up to try to recoup their losses. While laid-off employees are considered low priority, retention bonuses for key staff — if approved by the court — often get top priority because those employees are needed to help restructure the company.

"Where you really need to incentivize are people at the top levels, those who are going to be responsible for elaborating the plan, as well as implementing it," says Ishak, a partner with Rubin Thomlinson LLP in Toronto.

If key staff manage to successfully restructure Sears, he adds, it will be the best-case scenario for the company"s creditors. "If it"s a continuing enterprise, there will be far fewer losers," he says.

But perhaps the most outrageous injustices can be found at the highest level of Sears senior management, where CEO Eddie Lambert has spent years laying claim to the company’s assets.

As we’ve reported, previously if Sears Canada were to go bankrupt, Lambert - also the company"s largest shareholder - loses his equity stake, but he remains the company’s principal creditor. Already, Lampert has effectively laid claim to enormous amounts of the company’s assets through loans he’s made. His hedge fund, ESL Investments, also owns large stakes in Lands’ End and a Real Estate Investment Trust that gained control of some of Sears’ best properties in a $2.8 billion deal back in 2015, then leased them back to the company.

As is the case in many bankruptcy filings, the owners and managers of the company protected themselves while the company floundered. Now, Sears employees will need to make do without thousands of dollars in wages they had been anticipating.
 

Boeing To Lay Off "Hundreds" Of Engineers

President Trump will not be amused. In a letter to employees, Boeing VP John Hamilton announces that the company will lay off "hundreds" of engineers as soon as this week, affecting Washington and "other enterprise locations."

As Bloomberg headlines show:

• *BOEING TO SEND NOTICES FOR INVOLUNTARY LAYOFFS APRIL 21


• *BOEING ENGINEERING LAYOFFS PLANNED FOR JUNE 23, 2017

The timing is interesting as the Ex-Im Bank discussions hot up and comes just 2 months after Trump visited Boeing"s South Carolina plant.

Standing in front of a new Boeing 787-10 Dreamliner passenger aircraft made at in North Charleston, Trump repeated his campaign promises to promote American production that partly fueled his dizzying path to the White House. He warned of a "substantial penalty" for companies that move jobs out of the United States.

"We want products made by our workers in our factories stamped with those four magnificent words — made in the USA," Trump said.

The share price is entirely unimpressed...

Job Openings, Hires, Quits And Layoffs All Rebounded In November

While too backward looking to be actionable (it reflects the labor situation with a 2 month delay), today"s JOLTs report showed little in terms of changes for "Janet Yellen"s favorite labor market indicator": the number of job openings was little changed at 5.522 million, below the 5.555 million expectation, but above a downward revised 5.451 million (from 5.534 million). 

Hires and separations were also little changed at 5.219 million (up from 5.160 million), and 5.028 million (up from 4.966 million), respectively. Within separations, the quits rate was unchanged at 2.1 percent and the layoffs and discharges rate was unchanged at 1.1%. That said, the pace of hiring appears to have tapered off, after hitting cycle highs in February 2016 at 5.5 million, and remaining at levels largely unchanged over the past 2 years.

As shown in the next chart, while the trailing pace of job additions has been modestly declining in the past two years, net hiring also appears to have plateaued.

Meanwhile, discharges and other layoffs jumped by 68,000 in November rising to 1.637 million after hitting cycle lows of 1.513 million in September.

The offsetting good news, however, is that being "quits", or the so-called take this job and shove it indicator, also rose, increasing by 41,000 to 3.064 million, just shy of the all time high reported last December when a total of 3.088 million workers quits their jobs on their own terms.

Labor Market Rolling Over: Hiring Below 2014 Levels, Despite Rising Job Openings

Moments ago the BLS reported Janet Yellen"s favorite labor market indicator, the JOLTS survey, which as expected (since it tracked the modestly weaker September payrolls) showed that in September, the number of job opening rebounded from the August 378,000 plunge to 5.453 million, rising by a modest 33,000 to 5.486 million.  The number of job openings declined to a series low in July 2009, one month after the official end of the most recent recession. Employment continued to decline after the end of the recession, reaching a low point in February 2010.

The September job opening rate rose fractionally to  3.7% from 3.6% prior month, with the greatest number of job openings in the construction, financial, education & health services, and professional and business services industries. Job openings in trade & transportation, leisure and hospitality and government all fell.

The ratio of unemployed persons per job opening was 1.4 in September 2016; when the most recent recession began (December 2007), the number of unemployed persons per job opening was 1.9. The ratio peaked at 6.6 unemployed persons per job opening in July 2009 and trended downward until the end of 2015.  Since January 2016 the ratio has leveled off and has remained between 1.3 and 1.4.

However confrming that the US labor market is indeed rolling over, despite the near record (if modestly declining) number of job openings, the pace of hiring has failed to keep up, and slid once again in September, declining by 187,000 to 5.081 million. It was also lower than the September 2014 number of hires which was 5,092 million.

As shown, in the chart below, job hires were 1% lower compared to the 5.131 million a year ago.

Another way of visualizing the rollover in hiring: when superimposed over cumulative payrolls added over the past 12 months, it appears that the US job market is rolling ober.

The number of hires has exceeded the number of job openings for most of the JOLTS history. Since February 2015, this relationship has changed as job openings have outnumbered hires in most months, also suggesting that the pace of hiring has slowed down disproportionately.

Quits, which are generally voluntary separations initiated by employees, continue to rise. The quits rate can serve as a measure of workers" willingness or ability to leave jobs. The number of quits has exceeded the number of layoffs and discharges for most of the JOLTS history. During the latest recession, this relationship changed as layoffs and discharges outnumbered quits from November 2008 through March 2010. In September 2016, there were 3.1 million quits and 1.5 million layoffs and discharges.

Putting all the key numbers in context, hires in the private sector have increased since their low in June 2009 and are near their prerecession levels. In September 2016, there were 4.7 million hires. Quits in the private sector have increased since their low in September 2009 and are near their prerecession levels. In September 2016, there were 2.9 million quits.

Finally, taking a look at the distroted Beveridge Curve, which plots the job openings rate against the unemployment rate, shows that from the start of the most recent recession in December 2007 through the end of 2009, the series trended lower and further to the right as the job openings rate declined and the unemployment rate rose. From the start of the most recent recession in December 2007 through the end of 2009, the series trended lower and further to the right as the job openings rate declined and the unemployment rate rose. From 2010 to the present, the series has been trending up and to the left as the job openings rate increased and the unemployment rate decreased. In September 2016, the unemployment rate was 5.0 percent and the job openings rate was 3.7 percent. This job openings rate corresponds to a higher unemployment rate than it did before the most recent recession.