JOLTS Report Echoes Rebound in Jobs, Small Businesses See Sales Recovery

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Economic Report Monitor #39
June 9th, 2020

Another employment report comes out today, and while it's less popular and less current than the ones from last week, it's equally as telling. The Job Openings and Labor Turnover Survey (JOLTS) showed a decrease in separations as the labor market starts its rebound. Total separations fell -4.8 million in April after rising to over 14.5 million in March. Most of the drop there was a decrease in layoffs and discharges, about -3.8 million, especially in the accommodation and food services industry and retail. With the report lagging a month behind the jobs reports, it's optimistic to see improvement come a bit earlier than expected. However, job openings continued to decline falling below 2017 levels to 5.0 million despite the decrease in separations. It's likely that job gains in this rebound will be old positions being rehired and furloughed workers coming back from quarantine. Demand will probably not be able to sustain additional jobs for some time.



More optimism came out of the NFIB Small Business Optimism Index for May as the general index increased 3.5 pts to 94.4 with most categories increasing. The largest increase was an 18 pt increase in sales expectations as reopening will simply allow businesses to recover lost revenues. However, revenue expectations is still the second-lowest category just in front of earnings trend which fell 6 pts to -26. There was some positivity in employment and capital outlays expectations as both increased steadily. Data hasn't fully recovered though, and it will be important to see a stronger rebound in June as more businesses reopen. Currently, the index is at 2010-2013 levels as businesses will have a lot of ground to make up to get back to normal.

That sentiment is also expressed in the April wholesale inventories report. Inventories increased just 0.3% while sales crumbled leading to an increase in the highest inventories-to-sales ratio seen in last 10 years. Durable goods industries saw its ratio jump above two to 2.12x from 1.76x as that industry continues to be hurt the most. Nondurable goods industries increased from 1.01x to 1.22x. Some of the industries seeing the most slowdown include apparel (x6.02), automotive (x3.13), metals (x3.12), and machinery (x3.28), and also line up with the industries seeing the worst drops in retail sales. Apparel wholesale sales are getting pummeled, down -65.1% from last year. It's clear that certain supply chains have been slowed to a standstill because of the lockdown, and the recovery will be different by the industry.

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