While the U.S. added 120,000 jobs and layoffs dropped more than 12%, quits and hiring painted a less optimistic picture.
Nick Colas at ConvergEx Group highlighted the three major takeaways from the BLS' report.
- Good news: job openings were the highest of the recovery. Not since May 2008 have there been more open positions. Also notably, this has been the one JOLTS category to show a clearly positive trend since the equity market lows of 2009.
- Even better news: people are still quitting. Though the number of quitters was down from May to June it has been consistently elevated for the past year and a half. Additionally 52.9% of all separations were thanks to quitters, which is the third highest of the recovery. This is a very reliable indicator of future consumer confidence, as we will show in a moment.
- But the really bad news: hiring is holding everything back. Down more than 6% in June and more than 3% from a year ago, the number of new hires sank to a 6-month low in June. Unlike openings, this category has yet to show material, lasting improvement, as it remains on par with levels seen back in 2010. And the unfortunate truth is that the openings data is largely insignificant in the absence of hiring.
Colas pointed out that this economic cocktail is particularly hard to stomach for young college graduates. More than half of employed recent grads are in jobs where a college degree is not a prerequisite, Colas notes.
"Truly 'Discouraged workers?' Check. Mismatched skills? Check. Weakened purchasing power? Yep, that too. Especially problematic is that we are not talking about the working population as a whole. These are the kids in line to inherit leadership positions in an uncertain economy… and look how they’re starting off," he writes.
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