While total nonfarm employment still trails its pre-pandemic level by 5.7 million jobs and unemployment remains elevated, the U.S. job market continues to show strong signs of recovery. The number of job openings, a measure of labor demand, climbed to an all-time high of 10.1 million in June while layoffs simultaneously dropped to a record low of 1.3 million. Meanwhile the unemployment rate slid to 5.4 percent in July, the lowest since the first lockdown saw unemployment soar to 14.8 percent in April 2020.
As a matter of fact, the number of job openings is now once again exceeding the number of unemployed people, showing that work is in high demand as more and more businesses, especially in the hospitality sector, are staffing up again, or at least they’re trying to. According to the BLS, 9.5 million Americans were unemployed at the end of June compared to 10.1 million job openings.
As the following chart shows, the ratio of unemployed persons per job opening now stands at 0.9, down from 5.0 in April 2020. Prior to the pandemic, the number of job openings had continuously exceeded the level of unemployment since March 2018, signalling a tight labor market after the long recovery from the financial crisis. In July 2009, the number of unemployed persons per unfilled position had peaked at 6.4, mainly due to a collapse of job openings.
This chart shows the number of unemployed persons per job opening in the United States.
Based on that chart, when job openings outnumber the jobless, it’s a good time to get ready to sell stocks.