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The JOLTS Report Continues to Jolt Us

CAMS Weekly View from the Corner – Week ending 8/13/21

August 16, 2021

If you are an employer in any capacity or play such a role within an organization, the most recent JOLTS report from the Bureau of Labor Statistics (BLS) does not offer much comfort for the general landscape of trying to fill open positions.

In recent months we have shared this report from the BLS more often than we had shared over the previous few years.

While it is obvious in society at large that there is not an industry around that is not experiencing workforce fulfillment issues these reports continue to jolt us (literally) as to how significant the reality of the employment market disconnect continues to be. JOLTS stands for Job Openings and Labor Turnover Survey. Below we delve into two central aspects of the survey.

The above chart depicts the number of job openings currently identified via the JOLTS report.  We have taken this chart back two decades for a longer view to underline the significance of our current employment landscape. The red horizontal line identifies the previous high water mark from back in late 2018 and into early 2019.  At that time we thought the employment market was difficult relative to employers’ ability to fulfill their staffing needs.  Per the chart that pales in comparison to our current environment. This current survey has increased by an additional 700,000+ job openings compared to its previous release.  The trend rate is startling. Quit Rate Within the aforementioned JOLTS report we also get a labor turnover view within the employment market.  This is known as the Quit Rate and when this rate rises it reflects strong labor market conditions as people are more emboldened to leave their current employment.

Similar to our first chart of job openings the Quit Rate continues to reflect high water mark territory.  This chart also dates back two decades for a broader sense of our current climate relative to its history. The right side of the chart reflects a short dip and then an upturn toward the previous high mark.  All told the above data charts taken together offers the employment market remains disconnected.  The supply of open jobs far exceeds the number of people that are willing to work.  The Quit Rate further confirms this disjointed employment landscape as workers are viewing this as an opportunity to leave and search for a better employment agreement in whatever way that pertains to them. As long as this continues, or worse, gets worse, we can expect supply chain disruptions and bottlenecks to continue.  At the end of the day it takes people in place to make the supply process work efficiently.  In addition, employers will continue to be faced with wage pressure and other incentives in order to draw new talent as well as retain current staffing.  These supply chain challenges coupled with expectations of more wage pressure via the above dynamics offers that the general price inflation storyline may be offering policymakers a surprise in that the high inflation data is not as transitory as they continue to offer the citizenry.  As we shared in our previous edition, the list to choose from is long when it comes to topics to share in these Weekly Views of late.  The above is one of many that offer tributaries and feedback loops that impact not only markets but everyday life for we the citizenry.  We offer these types of data points so we can tie them together as succinctly as possible to help inform you not only relative to markets but also in your business or even head of household planning.

I wish you well…

Ken Reinhart

Director, Market Research & Portfolio Analysis

Footnote:

H&UP’s is a quick summation of a rating system for SPX9 (abbreviation encompassing 9 Sectors of the S&P 500 with 107 sub-groups within those 9 sectors) that quickly references the percentage that is deemed healthy and higher (H&UP). This comes from the proprietary “V-NN” ranking system that is composed of 4 ratings which are “V-H-N-or NN”. A “V” or an “H” is a positive or constructive rank for said sector or sub-group within the sectors.

This commentary is presented only to provide perspectives on investment strategies and opportunities. The material contains opinions of the author, which are subject to markets change without notice. Statements concerning financial market trends are based on current market conditions which fluctuate. References to specific securities and issuers are for descriptive purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. There is no guarantee that any investment strategy will work under all market conditions. Each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market. PERFORMANCE IS NOT GUARANTEED AND LOSSES CAN OCCUR WITH ANY INVESTMENT STRATEGY.

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