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Americans Quit Their Jobs at Record Pace in August, Adding to U.S. Labor Market Challenges

Around 4.3 million people left their jobs in August, the BLS noted Tuesday, just weeks ahead of the expiration of extended unemployment benefits.

Americans quit their jobs at a record rate In August, a key labor report indicated Tuesday, underscoring the challenges employers face in a tight labor market heading into the crucial holiday season.

Around 4.3 million people left their jobs in the final month of the summer, according to the Bureau of Labor Statistics monthly Job Opening and Labor Turnover (Jolts) report

The broader headline figure from the Jolts report, typically published one month in arrears, showed unfilled positions slipped from the record high of 11.098 million recorded in July to around 10.4 million in August, just prior to the expiration of extended unemployment benefits over the first weekend in December.

The benefit expiration, however, as well as improving vaccination rates and rising wage offers, have failed to tempt Americans back into the job market, with just 429,000 net new positions created over the past two months, easily the slowest gains for the year, although the BLS has noted that "pandemic-related staffing fluctuations in public and private education have distorted the normal seasonal hiring and layoff patterns."

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That said, average hourly earnings rose 4.6% from last year to $30.85, as blue-chip companies such as Amazon  (AMZN) - Get Amazon.com, Inc. Report and Walmart  (WMT) - Get Walmart Inc. Report ramp-up hiring plans heading into the holiday season.

"Stepping back from the noise, the big picture remains unchanged. Employment is about 9.4M lower than we would have expected if COVID hadn't happened, but this is a consequence of constrained supply, not weak demand," said Ian Shepherdson of Pantheon Macroeconomics. 

"The big question -- for employers, markets, and the Fed -- is just how far supply will rise over the next few months, easing what seems right now to be quite intense upward pressure on wage gains," he added.

Fed Chairman Jerome Powell had told reporters last month that it wouldn't take a knockout or super-strong employment report," to begin slowing the pace of purchases, which analysts suggest could last for around 8 months before the entire program is exhausted. 

From there, the first rate hike is likely to come in September of 2022.

However, with the "quit rate" in the job market now at a record high, and economists -- including at the International Monetary Fund -- as a result of supply chain disruptions and surging energy prices, a significant boost in job gains between now and the end of the year is by no means guaranteed. 

"Weak job growth is another indication that the 'real economy' is not that robust," said Darren Schuringa, CEO of ASYMmetric ETFs. "Monetary stimulus won’t turn around a weak economy, if jobs are not being created and consumers aren't spending money. Further stimulus or cheap money will inflate asset prices, spur inflation, and increase interest rate risk."