In my last article, I mentioned the April JOLTS labor report which was released Tuesday. Let’s look at it more closely because it’s known as Janet Yellen’s favorite labor report. Personally, my favorite labor report is the Atlanta Fed’s 3-month smoothed average of wage growth, but everything is worth reviewing. The JOLTS report was good overall, but did have some flaws. As you can see from the chart below, the number of job openings hit a record high. This makes sense because of the increased population since the last peak. Finally, there’s a labor market report which makes sense. It’s perplexing to see the jobless claims report so low considering the increase in population.

As you can see, the number of job openings in April was up 301,000 to 6.044 million. The report isn’t inconsistent with the BLS report because its April report was great; it was the May report which showed weakness. Like the ADP report, the JOLTS showed professional & business services job openings were healthy. There were 1.134 million job openings in that industry which was the highest out of all categories. On the other hand, the number of hires fell 253,000 to 5.051 million. The issue appears to be finding qualified workers. There’s a large difference between getting an education and being qualified for a job because most jobs require experience. The meme millennials know all too well is that firms ask for job experience at entry level positions. Millennials are confused how they can get experience if the first rung of the ladder requires experience.

Obviously, a decline in hiring makes the number of job openings not matter much because the openings aren’t getting filled. The labor market is so plentiful that there are too many jobs. This should increase wages for the workers who meet the qualifications which is a great sign. Another negative shown in this report is that the number of quits declined. People quit their job when they think they can find a new job with better pay. The more quits, the healthier the labor market. The April quits fell 111,000 to 3.027 million. This one month change doesn’t signal the labor market is weakening because there have been several negative months during this recovery. An issue would arise if next month sees another decline. That’s entirely possible because the May BLS report was week. I’ll hold out judgement until we get the May JOLTS report before I say this is a yellow flag.