Americans are quitting their jobs like crazy

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(Renaissance Macro)

Americans are quitting their jobs like crazy, and this is good news for wages.

The latest monthly "Job Openings and Labor Turnover Survey" (JOLTS) showed that in December, the total number of quits was 3.1 million, the highest level in a decade, while the quits rate was 2.1%, the highest since April 2008.

This rate, which takes the number of quits divided by the number of employees who worked or were paid for work, is one of the labor-market metrics most closely watched by Fed chair Janet Yellen.

If people are quitting their jobs, it suggests that they are confident in the labor market and are receiving better-paying opportunities elsewhere.

This makes it a leading indicator of wage inflation, according to Deutsche Bank's Joe LaVorgna.

In a note Monday, LaVorgna noted that the quits rate leads the year-over-year trend in average hourly earnings by six quarters.

For him, the quits rate was the most crucial thing in this report, as it gives us the state of wage inflation. And with the U-3 unemployment rate at 4.9% — the Fed's estimate of full employment — this inflation-related data is even more crucial.

The report also showed that there were 5.6 million job openings during December, the second-highest ever, and more than the expectation for 5.41 million.

The hires rate was 3.7%, and the layoffs and discharges rate was 1.1%.

"Overall, the JOLTS report highlights a clean bill of health for the US labor market while global financial markets continue to wobble," noted BNP Paribas' Bricklin Dwyer to clients.

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