Job openings in April fell to the lowest level in over three years. Available positions decreased to 8.06 million from a downward adjusted number of 8.36 million in the prior month according to the JOLTS Job Openings Survey. The figure was below all estimates in a Bloomberg survey of economists.
Placing the data into perspective, 8.36 million openings is over the twenty-year historical average of 5636. That average number is skewed as the last time we were below 6000 was 5/31/17 or seven years ago.
The closely watched number of vacancies per unemployed worker fell to the lowest level in nearly three years to 1.2. At its peak in 2022, the ratio was 2 to 1.
The data ignited a rally across the Treasury spectrum with swaps pricing a faster pace of rate cuts this year.
Equites were relatively unchanged.
Friday is the release of the BLS Employment survey. Has the labor participation rate (LPR) significantly increased? The LPR is nominally higher than its COVID lows but is considerably lower than its historical average.
[The LPR is the proportion of the working-age population that is either working or actively looking for work. This rate is an important labor market measure because it represents the relative amount of labor resources available for the production of goods and services]
Eleven or twelve ago the Federal Reserve’s buzz phrase was” escape velocity” where economic growth becomes self-sustaining and unemployment declines.
“Escape velocity” did not reach the popular lexicon such as “transitory” or “irrational exuberance,” but was widely discussed within economic circles.
Economic historians will debate the reasons as to why the LPR is still anemic and reasons as to why it is still anemic may be riddled with confirmation and political biases.
Some are suggesting the Fed may be already too late to cut interest rates, which will likely bring on sharper cuts later if Friday’s data surprises on the downside. How accurate is this emerging view? Friday could perhaps offer some insight.
What will happen today?
The ISM Services Survey is released. Will it surprise on the downside as the ISM Manufacturing Survey? How will it impact outlooks?
Last night the foreign markets were mixed. London was up 0.31%, Paris up 0.78% and Frankfurt up 0.84%. China was down 0.83%, Japan down 0.89% and Hang Seng down 0.10%.
Futures are nominally higher on dovish rate outlook. The 10-year is off 2/32 to yield 4.34%.
