Today saw the US Bureau of Labor Statistics (BLS) release their Job Openings and Labor Turnover Survey (JOLTs). This is a monthly release from the BLS and covers the period up to July 2021. They cover job openings, quit rate, hiring rate, and layoffs in their survey. Since Jerome Powell announced that the Fed had tied the asset purchasing taper to the employment rate, all employment data releases have become important for the market.
The number of openings rose to an all-time high for the 20 year history of the data series. It increased by 749k to over 10.9M job openings.
This kind of rate of increase could easily be creating a shortage of help wanted signs. The largest gains came in the following industries; heath care and social assistance (294k), finance and insurance (116k), and accommodation and food services (115k). Businesses are in dire need of employees. They have been raising wage rates to try to attract workers. Unfortunately for employers, there is a serious shortage of workers. Currently there are over 2.2M more job openings than unemployed workers.
Businesses are going to have to compete for workers. This could put lots of upward pressure on wages.
Meanwhile, hiring data showed a decline of 160k.
While shocking that we would have a decline with such a massive gap between jobs and workers, something to keep in mind is that this data only goes through July. I anticipate the JOLTs hiring data for the next three months to look red-hot. If it doesn’t and employers struggle to fill their openings, two things could be happening.
The first is that there is a skill mismatch in the economy. The openings are unavailable to be filled because these jobs require a certain level of competency or a degree (such as nurses or doctors). The market would continue to ratchet wage rates higher to attract more people into the field. This could lead to a period of severe shortages of services until people get accredited and hired.
The second possibility is that employers are making requirements that possible employees find undesirable. While this could include everything from weekly work hours to travel requirements, I worry that it could be tied to either the desire of people to work from home or vaccination status. It has been proven this past year that work from home is a productivity killer. This could be an interesting dynamic to watch as lower productivity and higher wage rates collide.
The general market continues to show weakness while commodities are mixed. Gold and soft commodities are holding steady but silver is getting hammered. Oil is up on the news that hurricane Ida will be taking production offline in the gulf coast area. The big story in the commodity sector is uranium. Sprott Asset Management created a uranium trust fund back in July. It trades on the Toronto Stock Exchange (TSX) which isn’t available to all investors. You can trade it in the US in the over-the-counter market (OTC) which also might not be available to all investors. The OTC ticker is SRUUF and the TSX ticker is U-UN. In spite of these setbacks, the fund has seen strong inflows. It has also been purchasing uranium on the open market. It functions similarly to Sprott’s other funds like PHYS for gold or PSLV for silver. I’m hopefully that Sprott will find a way to get this fund listed on the NYSE so that more investors will be able to buy into the fund.