All articles 199

06 08 2016 | by Victor Xing | Economics

April JOLTS: unexpected weakness in business services


The professional and business services employment sector has long been a bulwark against transient weakness in the U.S. labor market.  With an annual average income of 101K, job growth in the sector has been an enduring success story in the eyes of policymakers.  Nevertheless, April JOLTS reported signs of weakness in this sector, and it warranted a closer analysis.

It is true that April JOLTS reported further improvements in the headline job vacancy rate (3.9% vs. 3.8% prior), but growth in both hire rate (3.5% vs. 3.7% prior) and the quit rate (2.0% vs. 2.1% prior) slowed:

April JOLTS: higher vacancy rate, lower hire and quit rate

Surprise decline in services sector job openings

The improved vacancy rate masked a surprise decline in professional and business services sector job opening, as they were being offset by renewed strength in the manufacturing sector

  • Professional and business services: 4.2% vs. 5.4% prior
  • Accommodation and food services: unchanged at 5.0%
  • Leisure and hospitality: 4.7% vs. 4.8% prior
  • Healthcare and social assistance: 5.1% vs. 4.8% prior
  • Non-durable goods at 4.2% vs. 3.6% prior
  • Arts, entertainment and recreation at 2.8% vs. 3.5% prior
  • Retail trade at 3.8% vs. 3.7% prior
  • Trade, transportation and utilities at 3.9% vs. 3.5% prior
  • Construction at 2.9% vs. 3.1% prior
  • Government unchanged at 2.2%
  • Durable goods at 2.7% vs. 2.1% prior
  • State and local government at 2.1% vs. 2.0% prior
JOLTS vacancy rate captured improvements in the manufacturing sector vs. declines in the services sector

Hire rate: mixed picture in services vs. manufacturing

A similar narrative is evident in the hire rate data.  The top three services sectors – leisure and hospitality, accommodation and food services, as well as professional and business services – saw a decline in hire rate.  Manufacturing (both durable and non-durable) saw better hiring:

April JOLTS reported decline in services sector hire rate vs. stronger hiring in the manufacturing sector

Quit rate declined among non-cognitive non-routine professions

Quit rate for accommodation and food services, as well as leisure and hospitality sector declined in April, but professional and business services reported a slight uptick.  Quit rate for the manufacturing sector remain anemic, however.

April JOLTS reported a decline in quit rate for accommodation and food services sector, as well as leisure and hospitality


Despite a higher headline vacancy rate, the latest JOLTS is showing signs of slowdown in one of the strongest sectors in the U.S. labor market.  A similar narrative was also evident in the disappointing May Payrolls report, as the professional and business services sector gained 10K new jobs vs. 55K prior.  If persists, the latest development would cast a shadow over the U.S. economy amid entrenched job polarization – income instability within the higher-wage professional and business services sector can transmit weaker spending into the broader labor market and induce further pressure on lower-middle skilled workers.

Next article06 06 2016 | by Victor Xing | Central Banks

Yellen on “considerable and unavoidable uncertainties”