How will this week’s consumption indicators impact debt securities? (Part 2 of 8)
What is the JOLTS report?
The Job Openings and Labor Turnover Survey (or JOLTS) is issued by the Bureau of Labor Statistics (or BLS). The report includes monthly estimates of job openings, hires, quits, layoffs and discharges, and other separations. Although there’s a lag of one month in reporting, JOLTS data help measure demand for labor (employers’ need for employees) and track the health of the economy. Job openings are a measure of the “stock” of vacancies. The one-day reference for job openings gives a snapshot of the need for employees in different parts of the economy and allows the BLS to monitor change over time.
What was included in December’s JOLTS report?
The Job Openings and Labor Turnover Survey, or JOLTS, was issued by the Bureau of Labor Statistics (or BLS) on Tuesday, February 11. The headline number, job openings, came in at 3.99 million for the month of December, slightly down from November’s number of 4.03 million. The hires rate (3.2%) and separations rate (3.2%) also showed little change on a month-on-month basis.
The number of openings changed little in the total private sector and decreased in the government sector. The number of job openings decreased in: healthcare and social assistance; arts, entertainment, and recreation; and state and local government. The Midwest region experienced a decline in job openings in December.
How does the JOLTS report impact expectations for fixed income investors?
Other things remaining constant, a positive JOLTS report—one that shows the number of job vacancies is increasing—would mean the economy is recovering. Businesses expand as they see higher demand, putting hiring activity on an uptick. This would mean, other factors remaining constant, that the Fed would continue with its tapering of monthly asset purchases (currently at $65 million per month) as the economic environment improves, which means lower bond prices as Fed demand for securities slackens—especially for longer-term Treasuries and agency-backed securities—and higher interest rates.
To read about the impact of the JOLTS report and the increase in non-farm payrolls that was released on Friday, March 7, for tickers like the SPDR S&P 500 ETF (SPY) and other bond ETFs like TLT, TLH, AGG, and BND, move on to Part 3 of this series.
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