By Brian MacIver
Nearly 3 million U.S. workers quit their jobs in March in hopes of finding better employment, a sign that the job market continues to improve, economists said.
The quit rate, which calculates the number of individuals who quit their job as a percentage of paid employees, hit 2 percent while the number of job openings stood at 5 million at the end of March, according to the Bureau of Labor Statistics’ Jobs Opening Labor Turnover, or JOLTS, report released on Tuesday.
Of the 5 million total job separations, which includes quits, firings and layoffs, 2.8 million were from quits, a positive sign for the job market.
“The quit rate is a general indicator of how much people believe they can find a job,” said Michael Englund, chief economist at Action Economics, in an interview. “If people are willing to quit their jobs it’s because they believe they can easily find another.”
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The quit rate was at its lowest point, 1.3 percent, in February 2010 as the economy struggled to recover from the Great Recession.
The upbeat JOLTS report follows Friday’s non-farm payroll survey results that showed U.S. job creation had rebounded in April and the unemployment rate fell to the lowest level since the recession.
Consistent with analysts’ predictions, 223,000 non-farm jobs were created in April. The majority of the jobs came from the business services, health care, and construction sectors.
March’s job creation was downwardly revised to a gain of 85,000 jobs, the smallest level in three years, from the initial report of a 127,000 gain.
The unemployment rate dropped by 0.1 percentage point to 5.4 percent, the lowest it has been since the 2008 recession, and the number of unemployed individuals fell to 8.5 million persons.
“Two steps forward, one step back,” said Diane Swonk, chief economist and senior managing director for Mesirow Financial, in a blog post. “The rebound in employment was welcome but, when combined with downward revisions to March, not as good as it could have been.” The BLS originally reported that non-farm payrolls expanded by 127,000 in March.
“Prospects are good for a larger snapback in employment in May and June,” said Swonk, who predicts monthly job growth will rise back above 300,000 in the months to come.
Englund expects more moderate job gains of around 220,000 to 230,000 in the remainder of the year.
Professional and business services racked up the biggest gains in April, contributing 62,000 jobs in the month. Health care and construction were the runner-ups, each adding 45,000 jobs to the U.S economy.
The unemployment rate has been steadily declining over the past year. In April 2014, the U.S. unemployment rate was 6.2 percent and the number of unemployed persons has dropped by over a million.
The workforce participation rate, which dipped in March, returned to its February 2015 rate of 62.8 percent last month. There was little change in the number of discouraged workers, or those able to work but who are not looking for jobs due to a belief there are none available for them, with the number sitting at 756,000.
Englund said if the economy shows consistent growth over the next few months, the Federal Reserve will finally be able to raise short-term interest rates above the current level of 0 to 0.25 percent, where they have stood since the 2008 financial crisis.
“As long as growth continues and unless something happens that changes their minds, the Fed should be able to raise interest rates in September,” he said.
But the recent strength of the U.S. dollar and the resulting depressed export market, are clouding economists’ predictions for the timing of any rate hike.
“The result is more waiting for the Federal Reserve, where members of the Federal Open Market Committee (FOMC) need to see more consistent gains in employment before voting to attempt liftoff,” Swonk said.