KEY DATA: Openings: -345,000; Hires: -49,000; Quits: -14,000/ NFIB: +0.7 point; Hiring: -1 point; Openings: +2 points

IN A NUTSHELL: “Weakening job openings are not a good sign, though if the June employment report is any indication, the spring slump may be over.”

WHAT IT MEANS: Chair Yellen likes to follow the JOLTS report, which provides data on job openings, hiring and terminations. Well, we knew the May jobs report was bad and the May JOLTS numbers show that the weakness was well deserved. Job openings fell sharply as firms have either given up looking for workers they cannot find or don’t need more workers. Which is the reason is unclear, given the jump in hiring we saw in June. Most sectors reported declines in available positions, though there was an increase in retail, professional and business services. Hiring slowed as well, but the drop was not nearly as sharp or widespread. Most troubling was the drop in the number of people quitting their jobs. The quit rate, which you should rise as the market tightens, has plateaued. Workers are either uncertain about the strength of the market or are just not getting offers that they cannot refuse.

Small businesses were a little more optimistic in June, according to the National Federation of Independent Businesses. This was the third consecutive rise in the index. That said, the level of optimism remains well below the forty-year average. And while job openings are rising, business owners cannot find workers as nearly half the respondents reported that there were few or no suitable candidates.

MARKETS AND FED POLICY IMPLICATIONS: The FOMC meets in two weeks and normally the JOLTS report would play a major role in the thinking about the labor market. But with the June employment report trumping the May weakness, the members will have trouble figuring out the extent of the hiring recovery. I expect they will note that there are signs that the job weakness is fading, but I also expect the Chair to continue imposing her view that there is still some slack in the market. Whether the slack dissipates further will depend upon the actions of businesses when it comes to compensation. The unwillingness to raise wages is slowly breaking down, as witnesses by the actions of Starbucks and JPMorgan Chase. There are both market-based and political reasons for the increases. Retention in a tight labor market environment is critical for firms and the drive for a $15 per hour minimum wage cannot be dismissed in this election year. Regardless of the reasons for the increases, if the wage-hike movement extends to a growing number of large firms, small and mid-sized firms, who already cannot attract qualified workers, will be forced to raise their wages as well. That would trigger all sorts of worker moves as people start getting better offers. But I have argued this was going to happen for two years, so I will I believe it when I see it. As for investors, the JOLTS report is old and the small business one may be important but for many it is not watched closely enough. So don’t look for the data to change the recent bullish trend.