The “quits” rate time series produced by the Job Openings and Labor Turnover Survey (JOLTS) is a leading indicator of US hourly pay. As wages account for around 55% of a product’s or service’s price*, wage inflation and overall inflation rates tend to be closely related. Former Federal Reserve chief Janet Yellen was known to pay close attention to the quit rate but whether new Fed chief Jerome Powell regards the indicator with as much interest is as yet unknown.
Figures released as part of the most recent JOLTS report show the quit rate moved up from 2.3% to 2.4% of the non-farm workforce at the end of May. Quit rates were highest in the “Trade, transportation and utilities” and “Health care and social assistance” sectors while the only sector to record a fall was the “Manufacturing” sector.
Reactions by financial markets were muted. The yield on US 2 year Treasury bonds edged up 1bp to 2.57% while 10 year yields remained unchanged at 2.86%. According to cash futures prices, the probability of a rate rise at the September FOMC meeting moved a little higher to 85.4%. The US dollar was up marginally against the yen, down a little against sterling and roughly unchanged against the euro.
