The U.S. jobs markets may still have some structural problems to work out, but cyclical trends in employment have been on an upward trajectory for most of this year. At Pinnacle we monitor a broad array of employment indicators that have been ticking in a positive direction; here are a few examples:
- Non-farm payrolls have been over 200,000 for nine straight months. The unemployment rate has decelerated to 5.8% and is clearly trending down.
- Unemployment Claims 4-Week Moving Average, one of our favorite leading indicators of the job market, has been persistently under the 300,000 level for many weeks.
- Surveys of jobs hard-to-get are falling while surveys of job openings are picking up.
- Employment components within small business and regional Federal Reserve surveys are trending up.
- The Employment Trends Index continues to move in a positive direction.
One of the more counterintuitive data points heavily watched by the Federal Reserve is called the “quit rate,” and it comes out of the Jobs Opening and Labor Turnover Survey (also known as the JOLTS report). The quit rate measures the number of people who are voluntary leaving their jobs, and while more people voluntarily leaving their jobs sounds like a terrible thing for the employment situation, that’s not how the Federal Reserve or economists view this statistic. Though this may be surprising, a higher voluntary quit rate is considered a positive for the jobs market on the theory that workers only feel confident enough to quit their current jobs if they believe they can get another one. The number of quits out of the latest JOLTS report has now risen to within a hair of pre-recession levels, and is currently at a mark that implies an unemployment rate well below current levels. The quit rate may not be the statistic most discussed on CNBC, but it helps to reinforce our view that cyclical momentum is picking up in the U.S. jobs market.
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