A Worsening Job Situation For The Unemployed

Several reports issued over the last few weeks related to the employment market have generally not been positive. Last week the report on jobless claims showed an increase of 14,000. Econoday's view on the report:

Jobless claims are not pointing to any improvement in the labor market with initial claims up 14,000 in the February 22 week to a 348,000 level that's just outside the high end of the Econoday consensus. The 4-week average is unchanged at 338,250 which is slightly higher than the month-ago trend in a reading that points to no improvement (emphasis added) for the monthly employment report.

What is concerning about the report is the fact the trend, both weekly and the 4-week average in claims, continues to move higher since the end of the summer last year.

From The Blog of HORAN Capital Advisors

The recent JOLTS (Job Openings and Labor Turnover Survey) provides an indication that job openings continue to rise (blue line, below chart). There does appear to be a mismatch in this rising opening trend and those that are "not in the labor force but want a job" (red line, below chart). Since the end of October the "not in labor force but want a job" line has turned higher. So in spite of the improving JOLTS report, the trend is worsening for those seeking a job.

From The Blog of HORAN Capital Advisors

A silver lining may be the fact small business optimism is higher than it has been in several years, yet below prerecession highs. The Gallop report notes small business hiring expectations improved from 16% in Q4 2013 to 22% in the poll taken in January.

From The Blog of HORAN Capital Advisors

Source: Gallop

The recent worsening situation for the unemployed yet wanting a job seems rooted in the fact there is a mismatch in the skills needed for the open positions. A recent Federal Reserve paper discusses this situation that has resulted in an outward shifting Beveridge Curve. In an economic environment with slow economic growth, this mismatch between skills and job openings will likely continue to result in an elevated employment market.