U.S. quits scale record high, millions of job openings as labor

WASHINGTON, Oct 12 (Reuters) – The number of Americans voluntarily quitting their jobs surged to a record high in August and there were more than 10 million vacancies, pointing to a tightening labor market that could help to keep inflation high as companies raise wages to lure workers.

The Labor Department’s monthly Job Openings and Labor Turnover Survey, or JOLTS report, on Tuesday was another reflection of an economy that is battling labor and raw material shortages in nearly every industry, which are crimping growth.

“There are help-wanted posters in every shop window on Main Street, and the lack of workers is exacerbating the supply disruptions throughout the nation that is lighting a match to the fire of inflation,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “The labor market has already recovered.”

Quits increased by about 242,000 in August, lifting the total to a record 4.3 million. There were 157,000 people who quit in the accommodation and food services industry while 26,000 left in the wholesale trade business. State and local government education saw 25,000 departures.

People are most likely leaving their jobs for fear of contracting COVID-19. The number of quits increased in the South and Midwest regions, which have borne the brunt of the summer wave of coronavirus infections driven by the Delta variant.

Vaccinations rates are low in the South and Midwest and some states like Florida and Texas have banned mask mandates.

The quits rate shot up to an all-time high of 2.9% in August from 2.7% in July. The quits rate is normally viewed by policymakers and economists as a measure of job market confidence. The higher quits rate suggests wage inflation will likely continue to build up as companies scramble for workers, who have unlimited choice.

“These readings are also consistent with strong demand for labor, with people feeling confident in their abilities to get new jobs and not many layoffs taking place,” said Daniel Silver, an economist at JPMorgan in New York.

Inflation is way above the Federal Reserve’s flexible 2% target, while gross domestic product growth estimates for the third quarter are mostly below a 3% annualized rate. The economy grew at a 6.7% pace in the second quarter.

Stocks on Wall Street were weaker on worries over the impact of inflation on upcoming third-quarter earnings. The dollar rose against a basket of currencies. U.S. Treasury prices were mixed.

STRONG LABOR DEMAND

Though employment remains 5 million jobs below its peak in February 2020, economists believe that number probably is not a true reflection of the labor market’s health as the shortfall includes people who have retired.

Job openings, a measure of labor demand, dropped…