Job openings to employment (JoE) factor

Research evidence excerpt

Job openings to employment (JoE) factor

Barclays | Equity Strategy & Data Science

Equity returns are ultimately a function of earnings expectations, so labour demand should, in

theory, be an early indication of future fundamentals. That relationship is most evident in

labour-intensive sectors – Materials, Staples, Industrials and Utilities – where recruitment

decisions tend to move in step with the business cycle. The relationship is materially weaker in

Technology, Energy and Comm Services, suggesting headcount is a less reliable guide to future

profitability.

FIGURE 5. Equities performance is driven by earnings expectations FIGURE 6. Materials, Staples, Industrials and Utilities earnings tend to

be positively correlated to job-openings-to-employment (JoE) ratio

50 80%

60%

20 40%

10 20%

0%

-10

-20 -20%

-30 -40%

-40

-50 Mats Staples Indus Utils Fins DiscrC H'care Svs Tech Energy 00 02 04 06 08 10 12 14 16 18 20 22 24 26 Comm

MSCI Europe: Perf 6m % chg 12m Fwd EPS 6m % chg Europe: EPS mom correlation with JoE ratio

Since 2015, monthly frequency

Source: IBES, LSEG Data & Analytics, Barclays Research Source: IBES, LSEG Data & Analytics, Barclays Research

Low job-openings-to-employment (JoE) names have outperformed in H1 2026 despite a

seasonal backdrop that has historically been less supportive for returns. As economic activity is

expected to accelerate into year-end (Cruel Summer, 17 Jul) and seasonality typically turns

more supportive through H2, the current set-up remains constructive for adding to the trade.

FIGURE 7. Low job-openings-to-employment (JoE) tends to do well in FIGURE 8. BC EU job-openings-to-employment (JoE) Low minus High

H2 monthly excess returns and hit ratio

120 2.0% 90%

115 1.5% 80%

110 1.0% 70%

105 0.5% 60%

100 0.0% 50%

95 -0.5% 40%

-1.0% 30% 90