Workers quit more frequently in November while job vacancies remained high
US job vacancies remained high in November and workers were more likely to quit, suggesting the labor market continues to tilt in favor of workers. While good news for workers, the latest numbers come as a blow to the Federal Reserve’s efforts to curb hiring and wage growth in a bid to curb inflation.
There were 10.46 million job vacancies on the last day of November, down slightly from 10.51 million in October, the Labor Department said on Wednesday. That’s also down from a peak of nearly 12 million in March, but still over 4 million more than the number of unemployed.
Until 2018, the number of job offers never exceeded the number of unemployed.
In another key metric, the number of people who quit their jobs rose from about 4 million in October to 4.2 million in November. That’s below the record highs of around 4.6 million terminations at the end of last year, but is still historically high. Workers typically quit a job for higher pay in a new position. If many Americans quit, it can force companies to pay more to keep their employees.
“The main story of this report is that quitting is no longer going back,” Nick Bunker, head of economic research at Indeed Hiring Lab, said in an email. “Workers are predominantly leaving their old jobs to take on new ones, which is a key driver of wage growth. Wage growth may have slowed recently, but that slowdown is unlikely to continue if layoffs remain high.”
The Federal Reserve closely monitors job openings and layoffs for signals on the strength of the job market. More layoffs suggest there are still many companies desperately looking and still offering higher wages to poach workers from their current jobs.
This runs counter to the Fed’s goal of curbing hiring and the economy to bring down inflation. Gains have moderated in recent months but inflation was still high in November at 7.1% yoy.
“Overall openings and exits have declined from all-time highs,” Rubeela Farooqi of High Frequency Economics said in a report. “But the levels are elevated, indicating a very slow adjustment in labor market conditions. For Fed officials, this data supports the view that rates need to rise and stay high for some time to ease labor market conditions and bring prices back to the target.”
Fed officials would like to see the number of opens fall further. That’s because fewer vacancies would indicate less competition between companies to find and keep workers, reducing the pressure on them to raise wages.
The Fed has hiked rates seven times this year to a range of 4.25% to 4.5%, hoping to cool the economy without triggering a recession. But it expects its rate hikes to push unemployment down to 4.6% next year from 3.7% now, a rise that has never happened outside of a downturn.
Wednesday’s report comes just days before the government is due to release Friday’s December recruitment report, which will show how many jobs have been added over the past month and whether the unemployment rate has risen or fallen.
Wednesday’s report — known as the Job Vacancy and Labor Turnover Survey — provides more details on the labor market, while Friday’s monthly jobs report includes the unemployment rate and the number of jobs added or lost each month.