Last week’s horrendous jobs report, which indicated that the U.S. economy added no jobs in August, was particularly brutal for a number of reasons. First, it was a stark, kick-in-the-gut reminder that we are deep in the midst of what Kenneth Rogoff (Professor of Economics and Public Policy at Harvard) rightly calls the ’2nd Great Contraction.’ This is no ordinary recession, nor even a severe recession. It is, rather, a massive global contraction created by a global economy that was wildly overleveraged for at least a decade. And while we had all hoped that a few months of small but positive job growth might have signaled that we were slowly recovering, August’s report served as yet another clue that we are, most likely, a long way away from solid recovery mode.
Secondly, and far, far less important, was the fact that we missed with our forecast by a mile (or perhaps only by 30 days). Given the steady increases in TOTAL job listings on company websites that we had seen on LinkUp between May and August, combined with increases in NEW job listings in 3 of the past 4 months, we actually increased our already bullish forecast from earlier in August. Unfortunately, the rise in job openings on company websites that we’ve seen all summer has not translated into meaningful job growth, a fact that was echoed by the Job Openings and Labor Turnover (JOLT) report issued earlier today.
As the JOLT report indicated, job openings in the U.S. rose to a 3-year high of 3.2 million in July, but August’s jobs report of zero growth in non-farm payrolls indicates that businesses are simply not hiring at an equivalent pace. (It should be noted, however, that the private sector added 17,000 jobs in August, and if one adds back the striking Verizon workers, that number jumps to 63,000 private sector job gains – still infinitesimally small, but better than none). As big a fail (as my kids would say) as our botched forecast was last Friday, it could also be the case that we simply missed by a month in our assessment.
While LinkUp data is highly correlated to future job growth, there is an obvious lag between when a company posts a job opening on their corporate career portal and when that listing translates into a hire. In 2010, the average lag time was roughly 30 days. In 2011, that lag time has been extended to about 60 days, and it is possible that it is extending further as companies are increasingly cautious and deliberate about their hiring. What cannot be argued is that companies have dramatically increased the number of openings published on their websites.
In August, job openings jumped from 827,000 on August 1st to 863,000 on August 31st. The 90-day rolling average jumped from 798,000 to 826,000.
Since the beginning of the year, the number of jobs in LinkUp’s job search engine has jumped from 578,000 to 863,000 at the end of August.
To be sure, this number has risen in part because we are indexing job listings from approximately 2,000 more company websites today than we were at the start of 2011. But after accounting for growth in the number of companies indexed by the LinkUp search engine, it is still apparent that companies are adding more openings to their company websites.
The number of job openings per company has grown from just under 30 at the beginning of the year to over 40 openings per company at the end of August. While the initial BLS report for August certainly gave us reason to pause, I’ll gladly take the opportunity to double-down on our bullish forecast and make a few additional predictions:
• August’s jobs numbers will be revised upwards in the September report, and might be revised up again in the October report
• The September jobs numbers will be quite positive
• The October jobs report will be even more positive
It simply cannot be the case that 22,000 companies are posting 863,000 vacuous job openings on their corporate websites. The vast majority of those job openings will eventually be filled by newly hired employees, and the jobs reports from the Department of Labor will, at some point, reflect the increase in demand that we’re seeing today at LinkUp. It may take longer than any of us want or believe will be the case, but that’s my story and I’m sticking to it.