Nearly 3M people quit their jobs in April -- is that good news?
The government's latest release on the U.S. labor market offered fodder for pessimists and optimists alike, with the number of Americans opting to quit their jobs holding near pre-recession levels.
"The increase in the quits rate is a sign that workers are feeling more confident about the job market and are likely receiving more job offers," Fed Chair Janet Yellen said in a speech before the World Affairs Council in Philadelphia that marked the last public comment by a Fed official before a June 14-15 meeting by the Federal Open Market Committee (FOMC), which sets interest rates.
Some 2.91 million Americans voluntarily left their jobs in April, down from 2.95 million the month before, resulting in the quits rate declining to 2 percent from 2.1 percent, according to Wednesday's Jobs Openings and Labor Turnover Survey (JOLTS) from the Labor Department.
The figures are in line with pre-recession levels and for some analysts bode well for the U.S. labor market as well as for wage-growth prospects.
"It's another indication that the job market isn't slowing," said Gus Faucher, senior economist at PNC Financial. "You're not going to quit your job if you don't think you can find a new one."
The slight dip in the quit rate "reduces the chance of a July hike, at the margin," offered Ian Shepherdson, chief economist at Pantheon Macroeconomics. "By the time of the September meeting, we expect the quit rate -- which just moves inversely with the unemployment rate -- will have risen again."
Job openings climbed 2 percent, up by 118,000 in April to 5.8 million, reaching the top level since the Labor Department began tracking the numbers in 2000, while hiring scaled back to 5.09 million from 5.29 million in March.
"We are in a tight labor market, and there's anecdotal evidence firms are having trouble finding the right employees," said Robert King, senior economist and managing director at the Jerome Levy Forecasting Center. "At some point, they may have to pay more for those workers."
Hourly earnings have ticked up in recent months, rising modestly in May to an annualized rate of 2.5 percent.
"The number of job openings has surged in recent months, and the numbers are consistent with the idea that the slowdown in April and May payrolls will be temporary," noted Shepherdson. "No single hiring indicator is definitive, but this is a comforting report."
Brett Ryan, a senior U.S. economist at Deutsche Bank Securities, had a differing view: "The hiring rate could fall further, given we had a very weak employment report in May," said Ryan, who noted corporate profit margins have shown year-over-year declines for the last three quarters, something that hasn't happened since the last recession.
King concurred, while calculating a 15 percent drop in corporate profits since their peak in the third quarter of 2014. "This has only happened before near the onset of a recession," King said. "Some slowing in the labor market would be expected just based on that figure alone."
In her remarks on Monday, Yellen said the economic outlook favors additional interest rate hikes, but she dropped any specific talk as to timing. She acknowledged weak job growth in May, but said the payrolls report was not supported by other economic reports, including weekly jobless claims and JOLTS.
"I suspect stronger job growth in the month ahead, and the May report was an aberration," said Faucher. "JOLTS is another piece of evidence that shows the May jobs report doesn't fit with the broader picture that we're seeing."
The latest economic reports make the next employment report "that much more interesting and adds another note of caution for the Fed," said Ryan. "If they are contemplating a rate hike, do you want to do it at a time with a possible labor market slowdown?"