The Daily Update - Conflicting Jobs Data

6 out of 10 Americans are worried about a recession within the next 12 months according to surveys, but that hasn’t stopped a near-record number of workers choosing to leave their jobs – a typical signal of economic robustness and optimism. Jobs data out yesterday showed that the so-called “quits rate” reached an 18-year peak of 2.4%, having only been surpassed by the 2.5% level seen in January 2001 (although layoffs at that point were much higher at 1.7% versus 1.1-1.2% so far this year). Job openings – which had risen steadily since mid-2009 from 2.2 million to 7.6 million in November 2018 – have tapered off through 2019 but remain above 7.2 million, still well in excess of the 6 million official level of unemployed.

With the US unemployment rate at just 3.7% and data for layoffs remaining subdued, it becomes harder to gauge just how indicative the high-but-weakening job openings data and the weaker recent non-farm payroll figures are. The latest 130k NFP figure undershot expectations and brought the average reading for 2019-to-date below 160k versus an average above 220k during 2018.

The decline of both openings and payroll data would have been a strong signal for future slowing wage and economic growth if these peripheral readings on quits and layoffs weren’t giving off conflicting signals. In a more saturated labour market, such figures are a less pure reading of actual company hiring sentiment: as the weakness may not simply be due to trade tensions and consumer demand for their products.

It’s hard to see job openings rising much above recent levels: that are already more than 150% of what they were in the heights before 2007 (and over 3x their lows of 2009); likewise it is hard to see any further fall in unemployment levels as a stable long-term positive. But as long as such figures don’t jolt too far from current levels, and there are still relatively strong signs of dynamism within the labour market and relatively low levels of layoffs, it is unlikely that the weaker key figures we have seen thus far in 2019 are pointing to an imminent recession.

Also, today marks 18 years since the world-shaking and shaping tragedies of 9/11. On that day, at 08:46 and 40 seconds EDT (13:46 BST) Flight 11 crashed into the north face of the North Tower of the World Trade Centre, New York; 16 minutes later, at exactly 09:03 EDT Flight 175 crashed into the south face of the South Tower. The world changed. The lost will be remembered.

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