Key Points:
- The US labor market remains hot, with robust demand for workers and elevated quitting rates.
- After some moderation last year, the quits rate is no longer receding. This trend signals that wage growth is likely to stay strong moving forward.
- Layoffs also remain low with November being the 21st straight month with a layoffs rate below its pre-2020 nadir.
The US labor market remains on fire. The flames may have receded a bit from the highs of the initial reopening of the economy, but demand for workers remains robust and workers are seizing new opportunities. By any measure, the new data from this report shows a tight, hot labor market. A labor market this strong means an imminent recession is highly improbable. This year will pose many challenges for the US economy, but the labor market looks set to enter with considerable strength.
The major story from this report is that quitting is no longer receding. The high water mark was set in late 2021, but the rate of quitting is still elevated compared to rates seen right before COVID-19 hit the US. Quitting in the private sector was 3% in November, which was 16% higher than the 2019 average. This elevated rate is notable in industries like Leisure and Hospitality, which looked to be moderating earlier last year but remains elevated. Workers overwhelmingly quit their old jobs to take new ones, which is a critical fuel for wage growth. Wage growth may have moderated recently, but that slowdown is unlikely to continue if quitting remains high.
The flipside of workers leaving their old jobs readily is that employers aren’t letting go of the workers that remain. The layoffs rate continues to stay very low at less than one percent. November was the 21st straight month that the layoffs rate was below its all-time low prior to 2020. Some sectors are clearly going through a painful period, but layoffs and discharges remain subdued in the aggregate.
