Yellen it from the rooftops

Federal Reserve Chair Janet Yellen. (AP Photo/Paul Beaty)

INDICATOR: February Job Openings and Labor Turnover

KEY DATA: Openings: +299,000; Year-over-Year: +158,000; Hires: +71,000; Year-over-Year: +36,000; Quits: +14,000; Year-over-Year: +114,000

IN A NUTSHELL: "The beat goes on as another indicator points to further improvement in the labor market as openings, hiring and quits all increased."

WHAT IT MEANS: For years, Fed Chair Yellen has talked about her focus on the Job Openings and Labor Turnover, or JOLTS, report. In February, the numbers showed a large uptick from the weakness that appeared in January. The rise in job openings was impressive but given the one month increase exceeded the year-over-year gain, something such as weather may have been at work. Still, the level was the highest since January 2008 so it is clear that businesses have a growing need for workers. Unfortunately, they are not yet filling those positions very rapidly. The February hiring increase again was stellar but exceeded the gain from the previous year. Unfortunately, the level is still closer the fall of 2008 when the economy was beginning to crater. That shows the cautious nature of firms. Similarly, while the quit level, my favorite number, is increasing, it is about twenty percent below where it should be. Workers are still fearful about striking out on their own. When that changes, though, it will not only be a sign that the labor market has turned, but it will be a warning that firms have to start concentrating on labor force retention and actually paying up for keeping and attracting employees.

(A shout-out to Michelle Jamrisko of Bloomberg who pointed me to the their website which is posting as scorecard of some of the indicators that Chair Yellen has discussed. You can find it at:

MARKETS AND FED POLICY IMPLICATIONS: Businesses need more workers but clearly don't want to hire them, at least not yet. Whether that is due to uncertainty about the economy and/or government policy is something we will be debating for a long time but the result is that job gains are not as strong as they could be. Once business attitudes change, though, there is great potential for a surge in hiring. I suspect that will come by the summer and be sustained for an extended period, to use a Fed term. Until then, the Fed can continue to trim its bond purchases and hide behind the slowly changing conditions in the labor market. But the hare ultimately reaches the finish line and if it is prodded, it can pick up some speed. Growing openings could be that prod.

Joel L. Naroff is the co-author, with veteran journalist Ron Scherer, of "Big Picture Economics: How to Navigate the New Global Economy". Release date is April 21, 2014