August Jolts Report and NFIB Data Confirms the Tooling and Retooling Thematic.
As you digest all of the economic data we dumped on your today, you’re likely getting the correct view that we tend to look at things from several different angles, with the Employment Report being one such item.
Seasonally adjusted, in thousands
In addition to all of the third party metrics and the below the headline data we look at, another insightful report is the Job Openings and Labor Turnover (JOLTs) Report. The August JOLTs report, published by the Bureau of Labor Statistics showed the number of job openings in July rose to 5.8 million (versus expectations for 5.3 million), a record high since the data started to be collected in December 2000. By comparison, data from the National Federation of Independent Business showed that job creation remained flat at small businesses in July.
What we found more interesting inside the NFIB report was 56 percent reported hiring or trying to hire, but 48 percent (or 86 percent of those hiring or trying to hire) reported few or no qualified applicants for the positions they were trying to fill. In case you were wondering, much like the 5.8 million job openings, that 48 percent figure was also a record high.
Combined what these two reports tell us is that we have plenty of companies with jobs they need to fill, but cannot find qualified applicants. At the same time, we have a historically high percent of the population having given up looking for work. This strikes at the heart of the need for workers to “re-tool” as part of our Tooling & Re-tooling investing thematic.
Over the long run this is good news for companies like ITT Educational Service ([stock_quote symbol=”ESI”]) and Capella Education ([stock_quote symbol=”CPLA”]), as well as Strayer Education (STRA), which have been hit hard in recent years by the lack of wage returns on higher education and scrutiny from federal regulators. A recovering economy coupled with awareness of more and more job openings could push prospective students into taking the plunge.
One player that we’ll be watching on the horizon is McGraw-Hill Education, which has recently filed an S-1 form with the Securities and Exchange Commission for its initial public offering. The company has transformed from publishing “just” textbooks and instructional materials into producing digital learnings content and outcome-focused learning solutions, such as McGraw-Hill Connect, which Tematica Chief Investment Officer Christopher Versace uses as part of his graduate teaching.
