Why you should be skeptical of that job openings number

For all the signs of a cooling economy, employers sure had an awful lot of open jobs as summer came to an end, according to a shocker of a labor market report out Tuesday. But it's probably sending a misleading signal.

Driving the news: Employers reported having 9.6 million job openings at the end of August, according to the Job Openings and Labor Turnover report, up 690,000 from July, driven by a particularly large surge in professional and business services openings.

• Taken at face value, that would seem to suggest Corporate America is ramping up hiring plans once again — implying the super-tight labor market is tightening further rather than coming back into balance.
• The news drove bond yields up and stocks down, as investors put higher odds on further Fed interest rate increases. The Fed has been looking for openings to drift downward as a way to cool the job market without mass layoffs.

Yes, but: There is reason to think that the new openings number is an aberration and the real underlying story in the U.S. labor market is one of a gradual — very gradual — cooldown.

• Actual business hiring was basically unchanged in August, rising to 5.9 million people hired. The hiring rate was stable at 3.7%. The number of people who were laid off or quit was also flat in August.
• Moreover, the job openings number frequently displays volatility that doesn't seem to align with any underlying economic change. The rubber-meets-road indicators around actual hiring and layoffs are more stable.

Meanwhile, many other data points are consistent with a slowing labor market. The average of 150,000 jobs added to employers' payrolls in June, July and August was less than half the Q1 rate (312,000 a month).

• A survey of large-company CEOs by the Business Roundtable revealed a steep pullback in hiring expectations over the course of the year.

What they're saying: "Don't be fooled into thinking the longstanding cooldown in the labor market has suddenly reversed itself," said Nick Bunker with the Indeed Hiring Lab, in a note. The concentration of the surge in openings in a single sector, he said, is a strong hint that it reflects noise.

• "Yes, the job market is still retaining a lot of heat, but it hasn't gone back on the boil," said Bunker.