Last month murmurs of a labor market slowdown circulated after a relatively weak November job opening and hires report. But those numbers have since been revised upward and the December JOLTS report showed signs of even stronger growth.
Job openings hit a record high of 7.33 million in December 2018, according to the Bureau of Labor Statistics. Hires ticked up as well, while quits held steady and layoffs declined.
We’ve now had more job openings than unemployed Americans for 10 straight months, and job openings have risen by a staggering 29% year-over-year.
The number of job openings has risen much more quickly than the number of people hired each month. As a result, the hires-per-job opening ratio is down to a series low of 0.80, which is a sign that employers are having a tough time filling vacancies in a very tight labor market. The hires rate has recovered to its pre-recession level but remains slightly off the December 2000 peak.
Plentiful job opportunities are emboldening workers to quit jobs that are a poor fit in search of better ones, or to demand better working conditions and higher wages. The quit rate has now hovered around 2.3%-2.4% since March—the highest it has been since January 2001. The vast majority of those who left their jobs in December did so because they voluntarily quit, which indicates that workers are still feeling confident about the opportunities the labor market has to offer.
Another sign of growing worker confidence is the large number of strikes that took place in 2018. Workers who are not leaving their jobs but who feel dissatisfied with pay or working conditions increasingly feel they have the leverage to voice their demands.
Although there are several warning signs for the economy, such as the large drop in retail sales in December, broad labor market trends remained healthy through the end of 2018. Over the year, job openings have risen 29%, monthly hires have risen 7%, and quits have risen 4%–all signs of a dynamic and well-functioning job market. That dynamism reduced the number of unemployed Americans by 4% and supported wage growth above 3%, drawing additional workers off the sidelines and boosting labor force participation.
Could these trends continue in 2019? The strong January jobs report released last week gave us plenty of reasons for optimism.