Summary: US quit rate remains unchanged in July JOLTS report; quits, job openings, separations all up; labour demand remained “very strong” over mid-2021 but report somewhat “dated”; Delta variant holding back public-facing sectors.
The number of US employees who quit their jobs as a percentage of total employment increased slowly but steadily after the GFC. It peaked in March 2019 and then tracked sideways until virus containment measures were introduced in March 2020. The quit rate then plummeted as alternative employment opportunities rapidly dried up but proceeded to recover back to its pre-pandemic rate in the third quarter of 2020.
Figures released as part of the most recent Job Openings and Labor Turnover Survey (JOLTS) report show the quit rate remained unchanged in July. 2.7% of the non-farm workforce left their jobs voluntarily, the same rate as in June. There were 107,000 more quits during the month, offsetting an additional 1.053 million people employed in the non-farm sector in percentage terms.
“The strength in the job openings data indicates that demand for labour remained very strong over mid-2021 and that should put upward pressure on wages as businesses compete for workers,” said ANZ economist John Bromhead. However, he also noted the report was somewhat “dated”, pointing to August’s disappointing non-farm payrolls report.
Longer-term US Treasury bond yields fell moderately on the day. By the close of business, 10-year and 30-year Treasury yields had each shed 3bps to 1.34% and 1.96% respectively. The 2-year yield finished unchanged at 0.22%.
The rise was led by 41,000 more quits in the “Retail trade” sector while the “Transportation, warehousing and utilities” sector experienced the single largest decline, falling by 25,000. Overall, the total number of quits for the month rose from June’s revised figure of 3.870 million to 3.977 million.
Total vacancies at the end of July increased by 749,000, or 0.7%, from June’s revised figure of 10.185 million to 10.934 million. The increase was driven by a 294,000 rise in the “Health care and social assistance” sector, as well as 100,000+ increases in the “Professional and business services”, “Finance and insurance” and “Accommodation and food services” sectors. Overall, 12 out of 18 sectors experienced more job openings than in the previous month.
Total separations increased by 174,000, or 3.1%, from June’s revised figure of 5.612 million to 5.786 million. The rise was led by the “Professional and business services” sector, where there were 99,000 more separations than in June. Separations increased in 11 out of 18 sectors.
Bromhead noted sectors which rely on in-person sales are likely to be held back. “With the Delta variant continuing to spread through the unvaccinated parts of the US population, that’s weighing on sectors like leisure and hospitality that rely more heavily on face-to-face contact.”
The “quit” rate time series produced by the JOLTS report is a leading indicator of US hourly pay. As wages account for around 55% of a product’s or service’s price in the US, wage inflation and overall inflation rates tend to be closely related. Former Federal Reserve chief and current Treasury Secretary Janet Yellen was known to pay close attention to it.v