Need for workers, quits rate hold at record strength
Demand for workers remained strong in February as the U.S. economy faced growing headwinds from Europe, according to Labor Department data released Tuesday.
Job openings, hires and quits held close to record highs set in December, according to the February Job Openings and Labor Turnover report, even as high inflation and the impending war in Ukraine rattled markets and the economy.
Employers had 11.3 million open jobs listed on the final business day for the second consecutive month since openings set a record at 11.4 million in December. Hires rose to 6.7 million in February, a gain of 200,000 from January, while separations stayed even at 6.1 million.
Millions of Americans start and leave jobs each month through the normal churn of the economy, usually resulting in a net gain of hundreds of thousands of jobs. But workers have enjoyed historic leverage over employers as businesses seek to fill millions of jobs from a much smaller labor force than before COVID-19 emerged.
“The hires and quits rates have been moving in the same general direction for months. They both ticked up slightly in February. Workers continue to quit and get hired at fast rates in today’s economy,” said Elise Gould, senior economist at the Economic Policy Institute, in a Tuesday analysis.
Layoffs held even at 1.4 million and the quits rate — the percentage of U.S. employees who voluntarily left their jobs — ticked slightly higher to 2.9 percent, a record first set in December. A total of 4.4 million workers left their jobs voluntarily in February, likely to take another job with better compensation or career opportunities.
“At the end of February, the labor market was very tight. Job openings remain elevated and workers are seizing those opportunities by quitting their jobs,” wrote Nick Bunker, economic research director at Indeed Hiring Lab, in a Tuesday analysis.
Bunker said that while flatlining job openings and a plateau in the quits rate could be signs of a “relative cooldown” after months of steady advances, the labor market “still remains quite hot” compared to pre-pandemic norms.
The U.S. added 678,000 jobs in February despite concerns of a slowdown driven by the emergence of the omicron variant of the coronavirus. The economy has added more than 1 million jobs since the start of 2022, but faces new risks driven by the war in Ukraine.
The Russian invasion and strict economic sanctions imposed on Moscow have boosted pressure on food and energy prices, rattled financial markets and increased the risk of an economic slowdown.
And while the U.S. labor market and consumer spending held strong amid rising tensions overseas in February, it is unclear how a subsequent spike in gas prices may have affected March hiring.
The Labor Department is set to release the March jobs report Friday, which is calculated through two surveys conducted the week including the 12th day of the month: one conducted to see how many new workers businesses added and a poll of households to see how they have fared in the labor market.
“While the war in Ukraine is unlikely to significantly impair U.S. job gains in March, the disruption to global energy markets and surge in inflation does present a risk to the economic outlook moving forward,” Daniel Zhao, senior economist at Glassdoor, said in a Tuesday research note.
“We’re at an inflection point in the recovery where the fundamentals of the job market remain strong, but risk factors continue to accumulate.”
Zhao, like many economists, still expects another solid jobs gain in March, thanks in part to the historically strong demand for workers. Consensus estimates from economists project a gain of roughly 490,000 jobs in March and a decline in the unemployment rate to 3.7 percent, just 0.2 percentage points above pre-pandemic levels.
Zhao also expects wage growth to have kept climbing after an increase of 5.1 percent over the 12 months ending in February.
“The surge in quits we’ve seen is mirrored by a surge in job openings, and the two measures have tended to move hand-in-hand, even during the last two years despite pandemic forces. The dramatic increase in demand for workers is pushing employers to compete fiercely, and that gives current workers more opportunities to find a better fitting or higher paying job,” he said.
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