Demand for workers and employee turnover in the US remained at historically high levels at the end of 2021, a sign of the tightness in the labour market that has weighed on the economic recovery.
A total of 4.33mn Americans quit their jobs in December, a historically elevated level, although slightly below November’s record of 4.5mn, according to data released on Tuesday by the US labour department.
The “quits rate” — which measures the number of people voluntarily leaving jobs as a proportion of employment — came in at 2.9 per cent, its highest year-end reading on record. That was a slight decrease from the record levels of 3 per cent in September and November.
Tuesday’s data also show the number of job openings edged up to almost 10.93mn on the last day of 2021. That was a small boost from the almost 10.78mn openings at the end of November, and higher than Wall Street forecasts for 10.3mn openings.
During the pandemic American businesses have for months been contending with worker shortages, brought about by factors such as skills mismatches, childcare responsibilities or public health guidelines.
Some workers have capitalised on the resulting war for talent by quitting old jobs in search of better or higher-paying roles. Rising labour costs have also contributed to a broader rise in inflation, and are among the reasons why the Federal Reserve has decided to more quickly wind down its stimulus programme.
That trend has boosted the popularity among economists and market watchers of the quits rate as a gauge of labour market conditions. Because most people quitting their jobs generally do so voluntarily, the quits rate can be proxy of workers’ willingness or ability to leave jobs — the higher the rate, the more competitive the employment market may be.
The data come ahead of official employment data on Friday for the month of January, which are expected to show the unemployment rate held steady at 3.9 per cent and the economy added 150,000 jobs, which would be the smallest monthly increase in a year.
Lydia Boussour, lead US economist at Oxford Economics, said she expected a “mild contraction” in the labour market in January, with “strong positive seasonal factors” helping soften any effect the latest wave of coronavirus, brought about by the Omicron variant, may have had.
“Looking ahead, while a rebound in labour supply should act as a relief valve against excessively high wage pressures, the job market is poised to stay historically tight this year,” she said.
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