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The US JOLTS Explained

Plus500 | Thursday 01 February 2024

The labor market can reveal a lot about the state of a country’s economy as it can reflect its health and possible trajectory. As such, traders and consumers may be interested in familiarizing themselves with the US JOLTS report as it can provide a solid overview of the state of the world’s biggest economy’s labor market. Here’s what you need to know about US JOLTS: 

The US JOLTS Explained

Main Points:

  • The US JOLTS is a survey-based index that measures the health of the economy. 

  • The JOLTS is published once a month and measures layoffs, job openings, hires, and quits.

  • The JOLTS is published by the US Bureau of Labor and Statistics (BLS).

What Is JOLTS?

JOLTS, which is the acronym for Job Openings and Labor Turnover Survey, is a monthly-based survey that looks into the US labor market as it measures job openings, turnover, and more. 

The US Bureau of Labor Statistics, which is a unit within the US Department of Labor is the entity responsible for the gathering and the analysis of the JOLTS data.

Interpreting JOLTS Data: Key Components of JOLTS

Some of the key components included in the JOLTS report are job openings, hires, separations, quits, and layoffs.

Job Openings

This component measures the number of vacant job positions within a specific timeframe. It serves as a valuable indicator for many analysts, as it can reflect the health of the labor market. More job openings typically signal a stronger labor market, and vice versa.

Hires

This component represents the number of newly hired workers and can be used as an indicator of the health of the labor market. It provides an overview of the hiring pace and processes, with a higher number of hires often indicating increased growth and positive sentiment.

Layoffs 

As the name suggests, layoffs refer to the amount of employees getting involuntarily discharged from their positions. Higher layoff rates usually represent an ailing economy and a weaker labor market. 

Quits

This measures the number of voluntary resignations from positions, and typically, a higher number of voluntary resignations may indicate a more robust economy.

Why JOLTS Matters

The JOLTS report serves as a crucial tool for analysts, policymakers, traders, and employees, offering insights into the state of the labor market and influencing a country’s policy-making decisions. 

For instance, JOLTS data can impact central banks' choices; a positive report might prompt them to adopt a more hawkish stance on interest rates to counter potential inflation

The Drawbacks of JOLTS

While JOLTS can be a helpful tool for navigating market uncertainty, it is crucial to note that many market experts contend that it can be unreliable as they believe that it comes with its own limitations and may not necessarily provide the best picture about the state of the economy.

How Is the JOLTS Data Collected?

Here are the basic steps describing how the JOLTS data is collected and published once a month by the US Bureau of Labor and Statistics (BLS): 

  • Data is collected from businesses like stores and offices through Computer-Assisted Telephone Interviewing (CATI).

  • After collecting the answers from these businesses, the data is entered into a computer program. 

  • The interviewees participate in CATI data collection for the initial six months after being selected.

  • Following the six months, these interviewees are assigned to the web collection. This involves entering their data online at their convenience.

How Does JOLTS Affect Trading

The report can have broader effects on the financial markets, including Forex trading, as it has the potential to induce volatility across various currencies and market sectors. (Source: Financialsource)

Conclusion

To summarize, the US Job Openings and Labor Turnover Survey (JOLTS) is a vital tool for gauging the health of the economy, in general, and the labor market, in particular.

This data influences central bank decisions and serves as a key resource for analysts, policymakers, traders, and employees. 

As such, traders and analysts alike may want to keep tabs on any JOLTS releases to get a better insight into the state of the economy and the trajectory of the labor market. 

FAQs About JOLTS

How often is JOLTS data released?

The JOLTS data is released once a month by the US Bureau of Labor and Statistics (BLS).

What industries does it cover?

The JOLTS data covers nonagricultural businesses within the private and public sectors.

How does it impact monetary policy?

It can affect central bank decisions as stronger JOLTS data may warrant the need for monetary policy tightening and vice versa. 


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