One of Federal Reserve Board Chair Janet Yellen’s favorite statistics for assessing the health of the economy was updated on Thursday. The Bureau of Labor Statistics’ Job Openings and Labor Turnover Summary, commonly known as the JOLTS report, is one of the indicators on the “dashboard” of economic data that Yellen and other members of the Federal Open Market Committee use to make judgments about the health of the job market. The report for September found that Americans are quitting their jobs at the highest rate in six years — which is actually good news.
The JOLTS survey provides a more complete picture than the unemployment rate that is announced on the first Friday of every month. One of the ways JOLTS provides extra perspective is by tracking the reasons why people leave jobs. A key metric is the so-called “quits” rate, which measures the number of people voluntarily leaving a job. A higher quit rate is generally viewed as positive for the economy because it is assumed that workers are more likely to quit an existing job if they have already found a new job or are confident about being able to do so.
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The rate of 2 million quits in September was the highest since 2008, though it remains below the average level the economy saw before the Great Recession.
The number “will be welcome news at the Fed,” wrote Michael Feroli, an analyst with J.P. Morgan North America Economic Research. “Higher quits is a sign of increased confidence in the health of the labor market, and has been signaled out by Yellen in the past as a variable that she would like to see increase. Overall, today's JOLTS report is consistent with a number of other indicators that suggest the cyclical state of the labor market is demonstrating fairly rapid improvement.”
Other economists sounded similarly upbeat. “The implications of today’s JOLTS report are straightforward: The rise in quits and hires (and the still high number of job openings) corroborates the Fed’s assessment that the healing of the labor market has extended over the past several months beyond the drop in the jobless claims and beyond the rise in payrolls,” wrote Harm Bandholz, chief U.S. economist for UniCredit Research.
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In other respects, Thursday’s JOLTS report wasn’t quite as positive. While people being hired (5 million) and people leaving their jobs (4.8 million) were both up slightly, the number of job openings actually fell from the previous month, to 4.7 million from 4.9 million.
People are still finding jobs at a slower rate than they did before the financial crisis and Great Recession. And, according to an analysis of the JOLTS data by the Economic Policy Institute, there is no major sector of the economy where the number of open jobs exceeds the number of unemployed workers.
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“This demonstrates that the main problem in the labor market is a broad-based lack of demand for workers—not, as is often claimed, available workers lacking the skills needed for the sectors with job openings,” writes EPI senior economist Elise Gould.
To reach full recovery, “hiring needs to pick up,” Gould said in a separate blog post. “While it’s been generally improving, the hires rate, has not yet come close to a full recovery—it’s well below its prerecession level.”
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