Job openings pushed to a fresh record high at the end of the 1st quarter, indicating that labor market conditions remain healthy in the overall economy. The openings rate in the transportation sector continues to outpace the rest of the economy, and the pace of hiring provides further evidence that the industry is struggling to find workers.
The Bureau of Labor Statistics released results from the monthly Job Openings and Labor Turnover Survey (JOLTS) this morning, showing job openings in the economy rose to 6.6 million in January. This is up from 6.1 million in the previous month and sets a new record for the series. The job openings rate, which measures openings as a percentage of total employment plus openings, also reached a new record high in March at 4.2%, indicating that employment opportunities are plentiful in the economy overall.
The pace of hiring in the economy has failed to keep up, however. The hiring rate, which measures the number of hires as a percentage of the number employed, remained at 3.7% in March and has hovered around the same rate for much of the past three years. Historically, the hiring rate outpaces the openings rate (the base is smaller for the hiring rate), with the spread between the two series widening during weak labor market conditions. However, openings began outpacing hires in 2015 and 2016 and the openings rate has matched or exceeded the hiring rate in every month since the start of 2017.
This is a sign that employers across the economy are struggling to find workers to fill available positions. With unemployment already low in the economy, solid growth conditions, and stimulative fiscal policy, the labor market remains tight by historical standards, with reports of worker shortages in many industries in the economy.
Transportation openings remain high
This phenomenon is also playing out in the transportation and logistics sector. The job openings rate in transportation, warehousing, and utilities has outpaced the rest of the economy for much of the past year, and also set a record high of 4.8% in March. The hiring rate fell well short of openings in the transportation sector at 3.7%
The size of the gap between hires and opening would suggest that businesses in the industry are having a particularly tough time filling available positions. This sheds further light onto the challenges in the industry, particularly in freight transportation where demographic shifts and difficulties in recruiting and retaining employees have led to a shortage of labor.
Behind the numbers
The JOLTS survey is another in a string of releases that show that the labor market in the economy is strong. The combination of JOLTS data, employment, and jobless claims helps to paint the overall picture of employment trends in the economy. Right now, all of these indicators are signaling a tight labor market.
The JOLTS data is still a fairly recent survey collected by the Bureau of Labor Statistics, meaning that it is sometimes difficult to put readings into a proper historical perspective. Still, the switch that occurred in 2016, where the openings rate began to outpace the hires rate was a first for the series, and serves as a useful signal of exactly how tight labor market conditions are.
This, of course, is especially true within the transportation sector. Details from the JOLTS release do not get as detailed as to dig into trends in specific modes of transportation, but it is a sure bet that the driver shortage experienced by trucking carriers is playing a role here.
Ibrahiim Bayaan is FreightWaves’ Chief Economist. He writes regularly on all aspects of the economy and provides context with original research and analytics on freight market trends. Never miss his commentary by subscribing.