About 9.3 million people are officially unemployed in the US as quitting jobs has become the hottest trend in the country. We examine why.
Americans seem to think the pandemic period that devastated the global economy is a good time to quit their jobs and look for new opportunities. Now a record number of people in the country are resigning, creating a record number of job openings in the US.
According to The Labor Department's monthly Job Openings and Labor Turnover Survey report, some 4 million people quit their jobs in April, and the trend seems to be going strong.
The report also showed that the layoffs hit a record low in April.
Anecdotal evidence and data suggest that people are interested in seeking different career paths, which could be the result of self-reflection during the pandemic. Now there's a stronger desire to have a better life-work balance.
Millions of unemployed Americans remain at home because of trouble securing child care, generous unemployment benefits, and lingering fears over COVID-19 even as vaccines are widely accessible and the pandemic is subsiding.
"The evidence continues to grow that the lacklustre job creation of recent months is a result of constraints on labour supply and that the labour market is tight," said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.
Job openings, a measure of labour demand, increased by 998,000 to 9.3 million on the last day of April, the highest level since the series began in December 2000. Vacancies rose in all four regions and were spread across nearly all industries as well as the government sector.
Unfilled jobs in the accommodation and food services increased by 349,000. There were an additional 115,000 job openings in other services, while vacancies at manufacturers of long-lasting goods increased 78,000. But job openings decreased in educational services and the mining and logging industry.
Economists polled by Reuters had forecast job openings would rise to 8.3 million in April. The job openings rate shot up to an all-time high of 6.0 percent from 5.4 percent in March.
Hiring inched up to 6.1 million in April from 6.0 million in the prior month. The government reported last Friday that job growth picked up in May, with employers raising wages, but the pace of hiring was below economists’ expectations for a second straight month.
Companies are struggling to find workers even as about 9.3 million people are officially unemployed. Economists expect the labour market disconnect will be resolved in the fall. Government-funded unemployment benefits will end in early September. Republican governors in 25 states, accounting for more than 40 percent of the workforce, are ending federal government unemployment benefits, including a $300 weekly subsidy, starting on Saturday.
Schools are set to fully reopen in the fall and more people are expected to be vaccinated against COVID-19. At least half of the adult American population is fully inoculated.
The JOLTS report also showed 384,000 people voluntarily quit their jobs in April, lifting the total to a record 4.0 million. About 106,000 retail workers left their jobs, while professional and business services saw 94,000 resignations.
In the transportation, warehousing and utility industry, 49,000 workers quit. The number of quits rose in the South, Midwest, and West regions. The quits rate increased to an all-time high of 2.7 percent from 2.5 percent in March.
The quits rate is normally viewed by policymakers and economists as a measure of job market confidence. But nearly 1.8 million women have left the labour force since February 2020 mostly because of problems related to child care.
With willing workers scarce, layoffs and discharges dropped by 81,000 to a record low of 1.4 million. There was a 0.95 open job per unemployed person in April. Rising job openings and voluntary quits could pressure employers to raise wages.
Stocks on Wall Street were mixed. The dollar (DXY) rose against a basket of currencies. US Treasury prices were higher.
Trade gap narrows
A separate report from the Commerce Department on Tuesday showed the reopening economy was leading to a shift in domestic demand back to services from goods, with the trade deficit retreating from a record high in April as imports fell.
The trade deficit dropped 8.2 percent to $68.9 billion in April. The gap widened to a record $75.0 billion in March. Economists had forecast a $69.0 billion trade deficit.
Goods imports dropped 1.9 percent to $232.0 billion. The decline was led by a $2.6 billion drop in imports of consumer goods, which reflected decreases in textile apparel, toys, games and sporting goods as well as household appliances. Imports of motor vehicles, parts and engines also fell.
But imports of cell phones and other household goods increased. Imports of foods and beverages were the highest on record as were those of capital goods. Imports of services increased $0.7 billion to $41.9 billion in April. They were lifted by travel and transport services.
"With the pandemic coming under control, consumers are redirecting their spending towards domestically produced services and away from imports," said Bill Adams, a senior economist at PNC Financial in Pittsburgh, Pennsylvania.
Exports of goods gained 1.1 percent to a record $145.3 billion, boosted shipments of civilian aircraft. Exports of industrial supplies and materials were the highest on record, with crude oil shipments rising t $1 billion. But exports of motor vehicles, parts and engines fell. Auto production has been hit by a global semiconductor shortage.
Exports of foods, feeds and beverages were the highest on record. Exports of services increased $0.7 billion amid small gains in travel, transport and charges for the use of the intellectual property.
At $17.8 billion in April, the services surplus was the smallest since August 2012. Exports are likely to continue rising as global economic growth gains momentum.
When adjusted for inflation, the goods trade deficit decreased $7.2 billion to $98.6 billion in April.
Trade was a drag on gross domestic product growth in the first quarter. Most economists expect double-digit GDP growth this quarter after the economy grew at a 6.4 percent annualized rate in the third quarter.