Gavekal Capital: Disconnect Between JOLTS and Payroll Data Widens

Friday, November 22, 2013

Disconnect Between JOLTS and Payroll Data Widens

US JOLTS (Job Openings and Labor Turnover Stats) is a useful employment indicator that doesn't get as much attention as it's nonfarm payroll cousin. According to Bureau of Labor Statistics, JOLTS data was designed to "serve as a demand-side indicator of labor shortages". It is an important measure of how "tight" the job market is in the United States. One disadvantage to the data is it isn't very timely (the latest release is for September). 

Since the recession, the Job Openings Rate has been unable to move above 2.8%. The latest data point is again at 2.8%. The number of job openings has basically been unchanged since February. 


A divergent relationship has been developing since earlier this year between the JOLTS and the nonfarm payroll data. The spread between these two data points has widened out and persisted like never before since the JOLTS data was introduced (which was in late 2000). It would seem that either the payroll data has been overstated or the JOLTS data has been understated. The chart below shows this new trend. 


Finally, yesterday we commented that the first two regional fed surveys had underwhelmed. We had our third release for November today with the release of the Kansas City Fed Manufacturing Survey. This survey came in one point HIGHER than consensus and indicates manufacturing in this region is expanding in November.