Using JOLTS to Predict Labor Market Turning Points

JOLTS data, released monthly by BLS, has proven useful as a leading indicator of labor market turning points. Because it measures unmet demand (openings) and voluntary behavior (quits), it often signals changes in the labor market's momentum before they show up in the headline payroll number.

The Hires-to-Openings Ratio

One useful derived metric is the ratio of hires to job openings. When this ratio is low, employers are posting many jobs but struggling to fill them — suggesting labor shortages. When it rises rapidly, employers are filling openings more quickly, often because the applicant pool has grown. A sharp rise in the hires-to-openings ratio after a period of low ratios can signal that the labor market is loosening.

The Quits Leading Indicator

Historically, the voluntary quits rate peaks several months before payroll employment peaks in a business cycle. Workers become more confident and start quitting for better opportunities at the height of labor market strength. When the quits rate rolls over and starts declining, it suggests workers are less confident — often a precursor to broader labor market softening.

Track current JOLTS trends at our job openings section.