Demand for labor declined slightly in November while the rate of people quitting their jobs returned to an all-time high, according to data released by the Bureau of Labor Statistics on Tuesday.
Despite the decrease of about 529,000 job openings—a proxy for labor demand—the total number of vacancies remained high at 10.56 million, almost 4 million higher compared to a year ago, according to the job openings and labor turnover survey from the BLS, also known as the JOLTS report.
The report, which reflects data taken before the emergence of the omicron variant, shows that the labor market continued to be tight as the job vacancy rate remained at 6.6% on the month.
On top of that, with the number of unemployed workers shrinking in recent months, the mismatch between demand and supply of labor widened in November as the number of job openings for every unemployed worker reached a new high at 1.54.
One encouraging sign was that the economy added 191,000 new hires in November, bringing the hiring rate up by 0.1 percentage point to 4.5%.
But that number of new hires was only slightly higher than one-third of the total decline in job openings. As a result, the data suggested that it is likely that firms have been finding new approaches to deal with the labor shortage besides competing for more workers, especially as the separation rate—including the quit rate—remained at an all-time high.
Firms continued to struggle with turnover as the overall quit rate came back to 3.0% in November, matching its all-time high in September. But when looking only at the private sector, there was an all-time high as well, as the quit rate reached 3.4%, 0.1 percentage point higher than in September.
In the end, the data suggests that the trend of people leaving the workforce, known as the Great Resignation, does not seem to be ending anytime soon, if not accelerating.
The increases in job quits in November were recorded across firms of all sizes except for the largest, or those with more than 5,000 employees. Small firms, or those with fewer than 10 employees, had the greatest increase in job quits with 188,000 in November. The largest firms, on the other hand, had 3,000 fewer job quits on the month.
Our preferred measure for job quits—the six-month moving average—increased among all firm sizes.
The takeaway
In recent months, the labor market has shown improvement in both the unemployment rate and labor participation rate as workers return. But the JOLTS report for November pointed to the fact that such a return was a bit too slow to loosen up a labor market that was even tighter in November.
We expect the labor market to remain tight in the coming months as the impact of the omicron variant begins to materialize in late December, putting more pressure on the tight labor supply.
