US macro/JOLTS

The US job openings and labour turnover survey (JOLTS) is out. Good news abounds.

Let your eyes drift to the third row, second column, JOLTS, and note the print of 8.059m is a) quite a bit less than last month, at ~8.3m, and b) is largely back to where we’d expect the number to be, relative to prepandemic trend (which reflects population growth over time).

That’s great, labour market tightness is essentially unwound. In an inflationary environment, that’s very good news. Second, note the quits rate continues to trend below the pre-pandemic rate of ~2.3. People quit when they either have another job, or, are confident of getting another one, and thus it is strongly procyclical and correlated with labour market strength.

If we put vacancy rates against unemployment, we get the below plot. We are back on the 2010s trend! Normalacy is returned; to the extent that tight labour markets explain inflation, we should expect “soft landing” thematics continue (rates and inflation back down).

Stocks and bonds liked it (yields lower, stocks slightly higher).

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