JOLTS and the Quit Rate
What is quit rate telling us?
The JOLTS report gets a lot of attention but today, I want to focus on one specific component; the quit rate. The chart below shows the quit rate and highlights recessions since the data series was started in late 2000.
There are two things we notice:
A prolonged move down in the quit rate (which we have right now) is a clear sign of a softening economy.
A move below 2.2 - 2.0 level is clear recessionary signal.
We are sitting at 2.1 today, right in between the 2.2 - 2.0 level and we have had a clear trend lower since late 2022 during the great quitting.
Pay very close attention to this data set over the next few months. If we see the quit rate turn lower with no Fed response, this would be a sign that those that are pricing in cuts are correct and the Fed will be forced to follow.
On the other hand, if we see the quit rate move higher, we should expect to see the market price out the cuts currently in the mix and the Fed will likely hold
Today’s report shows a slight uptick from 2.0 to 2.1 which keeps the signal mixed. We will be watching this series closely over the coming months.