The Job Openings and Labor Turnover Survey (JOLTS) is a monthly report released by the U.S. Bureau of Labor Statistics (BLS) that serves as a vital pulse check on the American labor market. Think of it as the economy's detailed employment scorecard. While the main jobs report tells us about unemployment and payroll numbers, JOLTS digs deeper, revealing the underlying dynamics of the job market. It measures the number of unfilled job openings, how many people were hired, and how many people left their jobs—either by choice (quits) or not (layoffs). This data provides a rich, textured view of labor demand and worker confidence, making it a critical macroeconomic indicator for economists, policymakers, and, of course, savvy investors. By showing the churn beneath the surface, JOLTS helps us understand whether the job market is truly booming, just treading water, or about to take a dive.
As an investor, you might wonder why a wonky government labor survey should matter to your portfolio. The answer is simple: JOLTS is a key piece of the puzzle that the Federal Reserve (the Fed) uses to make decisions about interest rates. A “hot” JOLTS report, showing many more job openings than available workers, signals a tight labor market. This tightness can lead to higher wages, which can fuel inflation. In response, the Fed might raise interest rates to cool the economy down, which typically puts pressure on stock prices. Conversely, a sudden drop in job openings or a spike in layoffs can be a canary in the coal mine, signaling an economic slowdown or even an impending recession. By keeping an eye on JOLTS trends, investors can better anticipate the Fed's next move and understand the overall health of the economy in which their companies operate, rather than being caught off guard by market-moving policy shifts.
The JOLTS report is packed with data, but investors should focus on a few headline metrics that tell the most compelling story.
Often considered the star of the show, “quits” represent employees who voluntarily leave their jobs. The quit rate is a powerful gauge of worker confidence. When people feel secure and see better opportunities elsewhere, they are more willing to quit. A high quit rate is a hallmark of a strong labor market and is sometimes referred to as a sign of 'The Great Resignation'. A low quit rate signals fear and economic uncertainty.
This is the flip side of quits. It represents involuntary separations, or firings and job cuts, initiated by the employer. The layoffs and discharges rate is a direct measure of corporate distress. A sharp increase in this number is one of the clearest red flags for the economy.
This is a catch-all category for employees who left for other reasons, such as retirement, death, disability, or transfers to other company locations. While less of a direct economic indicator, it's essential for a complete picture of labor turnover.
“The intelligent investor is a realist who sells to optimists and buys from pessimists.” - Benjamin Graham While JOLTS provides a monthly snapshot, a value investor uses its trends to inform a long-term, rational view of the economic landscape.
In essence, JOLTS helps a value investor act like a true business owner, keeping a finger on the pulse of the labor environment that affects every company's costs, growth prospects, and ultimate profitability.