There is one other piece of strong news coming out of the report: more people are quitting their job.
“More quits. People are telling employers to put up or shut up,” said Neil Dutta of Renaissance Macro. “Job leavers as a percent of unemployment hit a cycle high of 10.8%. Job switching –> wage growth.”
Essentially what Dutta is getting at is that workers typically don’t voluntarily quit their jobs unless they feel good about securing other employment. Additionally, Dutta’s read-through (he called the number “the best news in the jobs report”), is that many people look for better employment through higher wages, so as quits increase so too will worker pay.
For a labor market that is getting closer and closer to full employment, the expectation is that headline jobs growth will slow since there is a smaller pool of workers to draw from. The focus then shifts to wage growth, as wages continue to lag and labor’s share of corporate income is still low.
Thus, Dutta thinks this is a good sign.
- Renaissance Macro