US September JOLTS ratios highest in series’ history

Summary: US quit rate hits series high of 3.0% in September JOLTS report; “indicative of growing wage pressure”; quits up, separations up, job openings down; openings-to-jobless ratio highest in series’ history.

Figures released as part of the most recent Job Openings and Labor Turnover Survey (JOLTS) report show the quit rate hit a new series-high in September. 3.0% of the non-farm workforce left their jobs voluntarily, up from August’s 2.9%. There were 164,000 more quits during the month, outweighing an additional 312,000 people employed in the non-farm sector in percentage terms.

“A high quits rate is often indicative of growing wage pressure, with employees quitting to move to better paid jobs elsewhere,” said Ray Attrill, NAB’s Head of FX Strategy within its FICC division.

US Treasury bond yields rose modestly on the day. By the close of business, 2-year and 10-year Treasury yields had each inched up 1bp to 0.52% and 1.56% respectively while the 30-year yield finished 2bps higher at 1.93%.

The rise in total quits was led by 56,000 more resignations in the “Arts, entertainment, and recreation” sector and 47,000 more resignations in the “Other services” sector. The “Retail trade” sector experienced the single largest decline, falling by 45,000. Overall, the total number of quits for the month rose from August’s revised figure of 4.270 million to 4.434 million.

In contrast, total vacancies at the end of September decreased by 191,000, or 1.8%, from August’s revised figure of 10.629 million to 10.438 million. The decline was driven by a 104,000 fall in the “Other services” sector and an 83,000 fall in the “Professional and business services” sector. The “Health care and social assistance” experienced the single largest increase, rising by 141,000. Overall, 10 out of 18 sectors experienced fewer job openings than in the previous month.

“Of note here is that the ratio of job opening to job seekers rose to 1.59 in September to be the highest in the more than twenty year history of the series. It will likely have risen further in October,” added Attrill.

Total separations increased by 186,000, or 3.1%, from August’s revised figure of 6.032 million to 6.218 million. The rise was led by the “Other services” sector, where there were 87,000 more separations than in August. Separations increased in 10 out of 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.

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