Summary: US quit rate declines to 2.1% in March; Citi: falling quits consistent with weakening perceptions of employment prospects; US Treasury yields fall; expectations of Fed rate cuts firm; fewer quits, openings, separations.

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. Following the easing of US pandemic restrictions, it proceeded to recover back to its pre-pandemic rate in the third quarter of 2020 and trended higher through 2021 before easing through 2022 and 2023.

Figures released as part of the latest Job Openings and Labor Turnover Survey (JOLTS) report show the quit rate declined in March. 2.1% of the non-farm workforce left their jobs voluntarily, down from 2.2% in February. Quits in the month decreased by 198,000 while an additional 303,000 people were employed in non-farm sectors.

“Falling quits are consistent with survey data showing quickly weakening perceptions of employment prospects and softer hiring has been accompanied by a rise in unemployment,” said Citi economist Veronica Clark. ”We continue to see downside risks for upcoming employment reports, including April payrolls on Friday.”

The report came out on the same day as the ISM’s April manufacturing PMIs and the announcement of no change at the FOMC’s May meeting. US Treasury yields fell on the day, with decline heaviest at the short end. By the close of business, the 2-year Treasury bond yield had shed 8bps to 4.96%, the 10-year yield had lost 5bps to 4.63% while the 30-year yield finished 4bps lower at 4.75%.

In terms of US Fed policy, expectations of a lower federal funds rate in the next 12 months firmed, with two 25bps cuts currently factored in. At the close of business, contracts implied the effective federal funds rate would average 5.305% in July, 2bps lower than the current spot rate, 5.225% in September and 5.11% in November. However, April 2025 contracts implied 4.785%, 54bps less than the current rate.

The fall in total quits was led by 59,000 fewer resignations in the “Other services” sector while the “Professional and business services” sector experienced the largest increase, rising by just 9,000. Overall, the total number of quits for the month decreased from February’s revised figure of 3.527 million to 3.329 million.     

Total vacancies at the end of March dropped by 325,000, or 3.7%, from February’s revised figure of 8.813 million to 8.488 million. The fall was driven by 182,000 fewer open positions in the “Construction” sector while the “State and local government” sector experienced the single largest increase, rising by 46,000. Overall, 10 out of 18 sectors experienced fewer job openings than in the previous month.  

Total separations decreased by 339,000, or 6.1%, from February’s revised figure of 5.539 million to 5.200 million. The fall was led by the “Retail trade” sector where there were 52,000 fewer separations while the “Educational services” sector experienced 21,000 more separations. Separations decreased in 14 of the 18 sectors.

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.

Summary: US quit rate declines to 2.1% in March; Citi: falling quits consistent with weakening perceptions of employment prospects; US Treasury yields fall; expectations of Fed rate cuts firm; fewer quits, openings, separations.

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. Following the easing of US pandemic restrictions, it proceeded to recover back to its pre-pandemic rate in the third quarter of 2020 and trended higher through 2021 before easing through 2022 and 2023.

Figures released as part of the latest Job Openings and Labor Turnover Survey (JOLTS) report show the quit rate declined in March. 2.1% of the non-farm workforce left their jobs voluntarily, down from 2.2% in February. Quits in the month decreased by 198,000 while an additional 303,000 people were employed in non-farm sectors.

“Falling quits are consistent with survey data showing quickly weakening perceptions of employment prospects and softer hiring has been accompanied by a rise in unemployment,” said Citi economist Veronica Clark. ”We continue to see downside risks for upcoming employment reports, including April payrolls on Friday.”

The report came out on the same day as the ISM’s April manufacturing PMIs and the announcement of no change at the FOMC’s May meeting. US Treasury yields fell on the day, with decline heaviest at the short end. By the close of business, the 2-year Treasury bond yield had shed 8bps to 4.96%, the 10-year yield had lost 5bps to 4.63% while the 30-year yield finished 4bps lower at 4.75%.

In terms of US Fed policy, expectations of a lower federal funds rate in the next 12 months firmed, with two 25bps cuts currently factored in. At the close of business, contracts implied the effective federal funds rate would average 5.305% in July, 2bps lower than the current spot rate, 5.225% in September and 5.11% in November. However, April 2025 contracts implied 4.785%, 54bps less than the current rate.

The fall in total quits was led by 59,000 fewer resignations in the “Other services” sector while the “Professional and business services” sector experienced the largest increase, rising by just 9,000. Overall, the total number of quits for the month decreased from February’s revised figure of 3.527 million to 3.329 million.     

Total vacancies at the end of March dropped by 325,000, or 3.7%, from February’s revised figure of 8.813 million to 8.488 million. The fall was driven by 182,000 fewer open positions in the “Construction” sector while the “State and local government” sector experienced the single largest increase, rising by 46,000. Overall, 10 out of 18 sectors experienced fewer job openings than in the previous month.  

Total separations decreased by 339,000, or 6.1%, from February’s revised figure of 5.539 million to 5.200 million. The fall was led by the “Retail trade” sector where there were 52,000 fewer separations while the “Educational services” sector experienced 21,000 more separations. Separations decreased in 14 of the 18 sectors.

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.