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The Job Openings and Labor Turnover Survey (JOLTS) was recently released by the US Bureau of Labor Statistics (BLS). The rise in the number of job openings in the month of July 2015 are indicating towards a trend that is most likely to benefit some of the low price builders such as PulteGroup, Inc. (NYSE:PHM) and others. The job openings, which remain a minor part of the huge report are depicting a trend which is forward indicator in the segment of labor market.

Rise in the number of jobs by 22% in July, 2015

The data of BLS which is inclusive of the data from non-farm businesses on a random basis, showed that in the month of July 2015, the number of job openings were 5.75 million, an increase of 22% on the YoY basis.

It must be noted that the Wall Street had estimated these job openings at 5.3 million and 3.6 million on an average. The process of compiling the index was started in late 2000s. The number of job openings in August 2015 was the most since the compilation of this index. The least number of jobs were reported in mid 2009. During this time period, the jobs were as low as 2.2 million. While labor sector plays a vital role for the realty industry, there are also other segments where huge number of jobs was opened.

Understanding the trend

In July 2015, the number of hires was 5.0 million, less than what BSL recorded in June 2015. The number of people quitting their jobs was 2.7 million in July 2015, almost same as June 2015. The number of people quitting jobs factor is not considered as the negative impact, but shows the level of employee confidence. Since 2014, this number has been trending in the upward direction. This indicates not just the employees’ state of mind, but also the rising momentum in the market.

Interestingly, quit rate was considered as a vital factor for decision making of Fed. This is so because employee confidence was indicative that Fed would increase the rates of interest.

Implications on the real estate sector can be understood in a way that not just the small scale builders like Pultegroup, Inc. (NYSE:PHM). deriving benefit out of this, but also the luxury builders are minting money.

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