WASHINGTON (Businesshala) – The number of Americans who voluntarily quit their jobs hit a record high in August and there were more than 10 million vacancies, pointing to a tight labor market that could help keep inflation high Because companies increase wages to lure workers.
The Labor Department’s monthly job openings and labor turnover survey, or JOLTS report, on Tuesday was yet another reflection of an economy that is grappling with labor and raw material shortages in nearly every industry, which are underpinning growth.
Christopher Rupkey, chief economist at FWDBONDS in New York, said: “There are help-wanting posters in every shop window on Main Street, and labor shortages are exacerbating supply disruptions across the country, igniting inflationary fires. ” York. “The labor market has already recovered.”
August saw an increase of about 242,000, bringing the total to a record 4.3 million. 157,000 people left the housing and food service industry, while 26,000 left the wholesale trade business. State and local government education saw 25,000 departures.
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Most likely people are leaving their jobs for fear of contracting COVID-19. Leaving numbers have increased in the South and Midwest regions, which have suffered the brunt of a heat wave of coronavirus infections driven by the Delta variant.
Vaccination rates are low in the South and Midwest, and some states, such as Florida and Texas, have banned the mask requirement.
The resignation rate reached an all-time high of 2.9% in August, up from 2.7% in July. The job loss rate is generally viewed by policy makers and economists as a measure of job market confidence. The high quit rate suggests that wage inflation will continue to build as companies scramble for workers who have unlimited options.
“These readings are also in line with strong demand for labor, with people feeling confident in their abilities to find new jobs and there aren’t many layoffs,” said Daniel Silver, an economist at JPMorgan in New York.
Inflation is well above the Federal Reserve’s flexible 2% target, while GDP growth estimates for the third quarter are mostly below the 3% annual rate. The economy grew at 6.7% in the second quarter.
Wall Street shares remained weak on concerns about the impact of inflation on earnings for the upcoming third quarter. The dollar rose against a basket of currencies. US Treasury prices were mixed.
strong labor demand
Although employment is 5 million less than its peak in February 2020, economists believe the number is probably not a true reflection of the health of the labor market as the shortfall includes those who have retired.
Job opportunities, a measure of labor demand, fell 659,000 to a high of 10.4 million on the last day of August. Data for July was revised to show 11.1 million unfinished jobs instead of the 10.9 million previously reported.
Despite the August drop, which economists attributed to coronavirus infections on the heat disrupting activity in consumer-facing service industries, vacancies were second on record and 49% above their pre-pandemic levels. There were 0.8 people per job opening in August.
“The JOLTS report consistently shows that the labor market is not as lax as indicated by the current 5 million job shortage,” said Lydia Boussour, chief US economist at Oxford Economics in New York.
There were 224,000 fewer vacancies in the healthcare and social assistance sectors. Employment opportunities in the housing and food service industry fell to 178,000. There has been a drop of 124,000 posts in state and local government education vacancies.
Regionally, job opportunities fell in the Northeast and Midwest. The job opening rate fell from 7% to 6.6% in July.
The government reported last Friday that non-farm payrolls increased by only 194,000 in September, the smallest gain since December 2020, after an increase of 366,000 in August.
The labor shortage was underscored by a separate NFIB survey on Tuesday, which showed 51% of small business owners reported job openings they couldn’t fill in September, a record high for the third straight month. Reading.
Recruitment fell from 439,000 jobs in August to 6.3 million. The biggest drop since December 2020 was led by the housing and food service industry, where 240,000 jobs fell in payrolls. Recruitment in state and local government education declined by 160,000.
The reduction in hiring was more pronounced in the Midwest region. The hiring rate fell from 4.6 per cent to 4.3 per cent in July.
With COVID-19 infections declining and schools fully reopening for in-person learning, it is expected that more people will rejoin the labor force. The labor squeeze could also ease in the coming months following the end of federal government-funded benefits in early September.
Businesses and Republicans blamed these expanded benefits for the record job openings. But between increased self-employment and all-time high savings, as well as early retirement, thanks to a strong stock market and record house price gains, the labor pool could remain shallow for a while.
Sophia Koropekij, a senior economist at Moody’s Analytics, said: “The problem persists in the long run, as many people who work in low-paying jobs, particularly in leisure/hospitality, are unwilling to return to these types of positions. can be.” West Chester, Pennsylvania.