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Tomorrow’s Jobs Number Could Be Big (Maybe even Huge)
I’m not one to often hedge my bets, but there are a few compelling data points worth highlighting that point to the possibility that tomorrow’s jobs numbers for October could be even bigger than our ‘official’ forecast of 293,000 jobs. Our official forecast, already well above the Bloomberg consensus estimate of 235,000, is based on approximately a 4% increase in new and total job openings in August which we expect will correlate to solid job gains in October.
But in addition to the August data (which is derived from LinkUp Raw, our labor market data product), a few other data points provide compelling evidence that the non-farm payroll number for October might actually be closer to a net gain of 325,000 or even 350,000 jobs.
The first data point is that in October, new job listings rose .8% and total job listings fell .6%.
Those percentages are pretty small and might be too small to warrant much attention, but it has never been the case in any month since we started tracking labor market data in 2008 that new job listings rose while total job listings declined. But October is always a bit of an anomaly with heavy holiday hiring and greatly accelerated hiring cycles and it is precisely those factors that I believe are driving a decrease in total job listings despite an increase in new job openings.
The strength that we’ve seen in the labor market for most of the year, combined with an uptick in labor demand for the holidays has led to a steady increase in new job listings which continued in October. Strong retail labor demand is most definitely evident when one looks at the total number of retail job openings in LinkUp’s job search engine this year as compared to the past two years.
While the overall increase in job openings can be largely attributed to the simple fact that we have added thousands of new companies to our search engine in the past 3 years, what is very relevant in the chart below is the fact that retail hiring started earlier in the year in 2014 than in either of the prior two years and has remained at an elevated level for a much longer period of time.
But the increase in new job openings on LinkUp in October means that for total jobs to have declined last month, even more jobs had to have come off the site, presumably because they were filled with hires. (The reasons we can make that assumption is because unlike a traditional pay-to-post job board where duration-based ads appear and are later removed because an employer pays for the ad for a specified period of time, our search engine indexes ONLY jobs found on corporate websites. Because of that, jobs in LinkUp’s job search engine are only included or removed from our search engine if they appear on a company’s website or are removed from a company’s website – in theory because an employer has a job they want to fill which is then later filled with a hire). And that dramatic increase in the number of jobs that came off LinkUp is precisely what happened last month.
The chart above shows both how many jobs rolled off LinkUp in the past 6 months (3.1 million) as well as how long those jobs had been on the search engine prior to being filled (the X axis, in days). In October, not only did the total number of jobs that came off the site in the prior 6 months jump by 600,000 jobs, but 368,000 of those jobs had been on the site for less than 15 days. That’s a lot of hiring going on, and a huge increase in the ‘velocity’ of that hiring.
That velocity, or the speed by which companies are filling open positions with new hires (often referred to as ‘speed-to-hire’), has been steadily increasing throughout the year. As the graphic below indicates, companies took an average of 51 days to fill jobs back in April, and are now only taking 41 days, on average, to fill jobs.
All of that is a really long-winded, over-evidenced way of saying that companies are posting a lot more new job openings, are filling even more job openings with new hires, and are making those hires faster than they have in a long time. That means we could see a really big number tomorrow morning. It might even be HUGE.