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Rising quits rate another sign of labor market confidence

February 10, 2021

Graph depicting the private

Source: Bureau of Labor Statistics

Job quitters in the private sector rose by 106,000 in December to a ten-month high 3.12 million. This marks the seventh increase in the last eight months and takes the private quits rate – voluntary separations initiated by the employee as a share of total employment – to a near-record 2.6 percent. This level was equaled or exceeded in each of the last two cycles as well, but only after nearly four years into the 2001-07 expansion and almost nine years into the 2009-20 expansion. Quits reflect confidence in the labor market and for obvious reasons tend to plunge during periods of economic weakness before rising slowly in recoveries. The current trend, then, is another sign of an accelerated cycle, one in which underlying labor market conditions are quite a bit tighter than implied by the headline unemployment rate or the still-massive deficit in payrolls relative to the pre-COVID peak.

Small business optimism slips

Small business optimism fell for a third straight month in January, slipping to 95.0 from a prior 95.9. Hiring and compensation plans were steady to higher, however, and a separate report from the NFIB showed that small businesses were adding workers at a healthy clip again last month (note as well that 90 percent of business owners trying to hire in January reported that they had few or no qualified applicants). The proposed hike in the federal minimum wage is very likely weighing on the headline here, but these numbers overall still suggest a generally healthy economy and an ever-tightening labor market.

Daily Trivia

Who are the only two Federal Reserve chairs in the post-World War II era whose tenures did not include any periods of recession?

Previous Question

What historical figure was honored with a statue on Edinburgh’s Royal Mile in 2008, in sight of the monument to his friend David Hume and positioned to face his home county of Fife?

Answer:

Adam Smith

Sources

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