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Good News! Job Openings Rose in March

Why Was the April Jobs Report Disappointing?

Job openings report

The JOLTS (Job Openings and Labor Turnover Survey) report from the BLS (U.S. Bureau of Labor Statistics) is a good forward indicator of the labor market. The BLS compiles data from a random sample of private non-farm businesses. Job openings are part of the report. The other part addresses hires versus separations.

March job openings up 9%

In March 2016, there were 5.8 million job openings—up 9% YoY (year-over-year). The number of job openings came in well above Wall Street analysts’ estimates of 5.5 million and above the 3.6 million average since the BLS started compiling the index in 2000.

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During the summer, the JOLTS number was the highest since the index started in late 2000. The index bottomed out at 2.2 million in mid-2009. Most sectors reported more openings.

There were 5.3 million hires in March 2016. This was a small decrease from February. The quits rate was 3 million. It has been trending upward gradually.

The quits rate measures the number of people who quit their jobs. It’s used as an indicator of employee confidence. This number has been trending upward since last year. It’s another indicator that points to increased momentum in the labor market.

The quits rate is a key input for the Fed’s decision making. As confidence improves, the Fed will continue to raise the rates. Investors can trade through the iShares Barclays 20+ Year Bond ETF (TLT).

Implications for homebuilders

Job growth matters the most to homebuilders. In fact, on a conference call, Jeffrey T. Mezger, KB Home’s (KBH) CEO, stated that jobs were more important than interest rates.

Builders most leveraged to the lower price points like PulteGroup (PHM) and D.R. Horton (DHI) are in the best position to take advantage of increasing job growth. Luxury builders like Toll Brothers (TOL) also benefit from the divided job market. Investors interested in trading in the homebuilding sector could look at the S&P SPDR Homebuilders ETF (XHB).

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