Let's take a look at quits and what they say about decreasing the strength of the jobs market.

Data from JOLTS, the BLS monthly job turnover report, chart by Mish

Please consider the Job Openings and Labor Turnover Summary for January 2023.

Job Openings

• On the last business day of January, the number and rate of job openings decreased to 10.8 million (-410,000) and 6.5 percent, respectively. 
• In January, the largest decreases in job openings were in construction (-240,000), accommodation and food services (-204,000), and finance and insurance (-100,000). 
• The number of job openings increased in transportation, warehousing, and utilities (+94,000) and in nondurable goods manufacturing (+50,000). 

Hires

• In January, the number and rate of hires changed little at 6.4 million and 4.1 percent, respectively. 
• Hires changed little in all industries. 

Separation Description

• Total separations include quits, layoffs and discharges, and other separations. Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs.
• Layoffs and discharges are involuntary separations initiated by the employer.
• Other separations include separations due to retirement, death, disability, and transfers to other locations of the same firm.

Separation Numbers

• In January, the number of total separations changed little at 5.9 million. The rate was unchanged at 3.8 percent. 
• In January, the number of quits decreased to 3.9 million (-207,000), and the rate was little changed at 2.5 percent. 
• Quits decreased in professional and business services (-221,000), educational services (-14,000), and federal government (-5,000).

Quits by Sector in Thousands

Quits Discussion

• Quits have peaked everywhere. 
• Relative strength is in the Leisure and Hospitality sector and the Accommodation and Food Service sector, where you would expect it the most. 
• Relative weakness is in Professional and Business Services, Retail Trade, Manufacturing, and Construction.
• The plunge in Professional and Business Services is notable. 

Professional and Business Services Examples

• A professional services job is one where an individual or a firm delivers a service or carries out work on behalf of a client. Typically, this work does not involve manufacturing or creating a physical output. 
• Legal services, Logistics, Accounting and Bookkeeping, Project Management. Marketing Consultancy, Digital Marketing, Event Management, Graphic Design, Client Management, Architecture, and IT Services. 

The preceding bullet points from Wrike. 

Based on the first bullet point description, real estate agents and mortgage brokers may be in Professional and Business Services category. 

Even so, why the sudden plunge of 221,000? Housing has been weak for a long time.

How Good is the Data?

That's another good question because the response rate to the survey is abysmal. 

Federal Reserve Chair Jerome Powell and his colleagues often emphasize that they are “ data dependent.”

But what happens if you can’t depend on the data?

‘Garbage’ Surveys Erode US Data Confidence

Bloomberg reports ‘Garbage’ Surveys Erode US Data Confidence

• The response rate for the employment cost index, a pay measure closely watched by the Fed, has fallen to below 50% from nearly 75% at the end of 2012
• The employment statistics survey, which informs payroll and wage metrics each month, has seen its response rate among employers drop to just under 45% as of September from about 60% at the end of 2019
• The response rate on the so-called JOLTS survey on the number of job openings — a data series the Fed highlighted repeatedly last year — was already falling before the pandemic, which saw participation decline even further. The rate is now just under 31%

Basura - Garbage

Good to see Powell subtly downgrading JOLTS. A friendly reminder--this is a voluntary survey of 21k establishments (vs 651k for payrolls) whose response rate was 30% and falling last Sept. From a time series perspective I think the technical term is "basura" pic.twitter.com/4LIHF230tK

— Julia Coronado (@jc_econ) February 2, 2023

A friendly reminder--this is a voluntary survey of 21k establishments (vs 651k for payrolls) whose response rate was 30% and falling last Sept. From a time series perspective I think the technical term is "basura".

Coronado is a former chief economist at various financial firms & Fed economist.

We continue to get divergent views of labor market dynamics from hiring and quit rates vs job openings in JOLTS. The former accords w/ Q4 earnings reports--firms are seeing lower turnover and having an easier time sourcing workers even as they are slowing their hiring pic.twitter.com/kzOLKraUpi

— Julia Coronado (@jc_econ) March 8, 2023

Key Questions

Even if the numbers themselves are garbage, what about the trends in the numbers? And what's going on with Professional and Business Services? 

I will see if I can get an answer to those questions and will post an update if I do.

Senator Elizabeth Warren Confronts Jerome Powell But She's Not Worried About Inflation

Politically speaking, no matter whether you agree or disagree Senator Elizabeth Warren Confronts Jerome Powell But She's Not Worried About Inflation

We all understand rate hikes act with a lag. None of us really know how big that lag is.

But here we are, and another half-point hike now seems baked in the cake on March 22. 

Flying Blind

Rate hike odds from CME Fedwatch, weighted average calculation by Mish.

Meanwhile, Powell is flying blind on many of these economic reports. 

Please take that into consideration as Powell's Hawkish Speech to Congress Sends Interest Rate Hike Odds Soaring.

The odds of an "accident" keep increasing. 

More By This Author:

Single Family Housing Transactions Have Crashed, But When Will That Matter?
The Fed Chair Puts A Spotlight On Rent, Has Rent Really Stabilized?
Powell's Hawkish Speech To Congress Sends Interest Rate Hike Odds Soaring