Workers Voluntarily Leaving Jobs Rose to 2.7%

By | August 16, 2021

Welcome to FTR’s “Monday Morning Coffee “ blog. The following article is designed to keep busy executives up to date with the latest economic data releases. Released every Monday, this blog promises to keep our clientele updated with the latest weekly economic news and developments, highlighting its impact on the transportation, freight, and equipment markets. Hopefully, this will be an informative addition to the fine body of work associated with FTR.


The Dow and the S&P edged up to closing records on Friday and notched a second week of gains, buoyed by Walt Disney shares, offsetting a sharp drop in consumer sentiment. Walt Disney shares rose 1.00% as one of the biggest boosts to both the S&P and the Dow after its profits topped market expectations as its streaming services added more customers than expected and its pandemic-affected theme parks returned to profitability. However, a report from the University of Michigan dented optimism after it showed its preliminary index fell to 70.2, its lowest in a decade. Analysts say the drop can be attributed to COVID-fatigue, raising speculation on how the consumer might react to the spread of the Delta variant. The Dow Jones Industrial Average rose 15.53 points, or 0.04% to 35,515.38, the S7P 500 gained 7.17 points, or 0.16% to 4,468 and the Nasdaq Composite added 6.64 points, or 0.04% to 14,822.90

Fed officials likely breathed a sign of relief when the July CPI came in at only 0.5%, ending a four-month streak of upside surprises and showed price hikes slowing from the fast pace of the last few months. Relief came on the car front as well as travel categories lending credence to the Fed’s notion that the recent degree of inflation is unlikely to persist as supply constraints ease and demand cools from the frenzied pace of this spring’s reopening of the economy and stimulus spending. On the other hand, inflation is still elevated and is not going away. The PPI for final demand rose 1.0%, up 7.8% from a year ago. Although there were some signs of easing in the pipeline input costs continue to climb for both goods and services. For example, services for intermediate demand are up 9.2% over the past year, nearly triple the high-water mark of the last cycle and processed goods prices are up 23% from a year ago.

Input costs apply to labor. The JOLTS data showed job openings reached 10.1 million, a new record high. For every job opening, there are only 0.9 unemployed workers, a ratio similar when the unemployment rate was 4.0% in early 2018. The number of workers voluntarily leaving their jobs rose to 2.7%, reflecting workers are recognizing that there are growing opportunities and are using this time to improve their job situation. The NFIB latest report showed that businesses are willing to raise compensation but are still having trouble finding workers. The American working person is finding a confused background of COVID fears, a return to an office environment and inflation, plus an end to stimulus checks, leading to an environment of growing fear. That is amid a background of a strong need for workers. That’s a lot to take for anyone. The NFIB index fell in July and University of Michigan’s index crashed. Whether this is a temporary, or lasting state, will have powerful ramifications for consumer spending going forward. Its no wonder that several Federal Reserve officials want to wait until September data is in and the transitions of school and office re-openings before starting to reduce tapering and start on the path of tightening monetary policy.

This week will provide insight on retail sales, industrial production and housing starts, as well as leading economic indicators.

Latest Data

The U.S. Economy:

The National Federation of Independent Business index fell 2.8 points to 99.7 in July almost erasing all of June’s gains. Six of the 10 components declined, three improved and one was unchanged. A net 27% of businesses plan to create new jobs in the next three months, down one point from June. Sales expectations over the next three months decreased 11 points to a negative 4% of owners. Owners expecting better business conditions over the next six months decreased 8 points to a net negative 20%. 49% of owners reported job openings that could not be filled, a 48-year high. A net 38% reported raising compensation, down one point from June. A net 27% plan to raise compensation in the next three months, up to one point from June. 55% reported capital outlays in the last six months, up 2 points from June. The report suggests that finding qualified labor is a major problem for small businesses. The supply chain bottlenecks is also hampering production. The fall in the index is a small setback in what has been a steady stream of mostly positive economic news, including a strong payrolls report.

The CPI increased 0.5% in July in line with expectations but a deceleration from the 0.9% increase recorded in June. The indexes for food, shelter, energy, and new vehicles all increased in July.  The food index rose 0.7% in July and energy posted a 1.6% increase in July, boosted by a 2.4% advance in gasoline prices. Excluding food and energy, the core index rose 0.3%, a noted slowdown from the 0.9% advance in June. The index for used cars increased 0.2%, much slower than the 10.5% increase in June. On a year earlier basis, the total CPI was up 5.4% and the core was up 4.3%. It’s early, but there were tentative signs that inflation may have peaked and some of the temporary factors behind the present surge may be fading.

The final demand PPI increased 1.0% in July, the same increase as in June. Final demand goods increased 0.6% in July, considerably slower than the 1.2% advance in June. Prices of energy rose 2.6%, while food decreased 2.1%. Excluding foods and energy, the final demand goods index increased 1.0%. The index for final demand services increased 1.1% in July, the largest one-month increase since the data was first calculated in December 2009. Nearly half the increase in the total index the increase came from final demand trade services, which reflect changes in margins by wholesalers and retailers. The final demand index was up 7.8% from a year ago and the core index was up 6.1%. in July, the price of tobacco products moved up 2.7%. Prices of gasoline, diesel fuel, consumer, institutional and commercial plastic. products and eggs moved up. The price of beef and veal fell 11.6%. The price of electricity and softwood lumber also declined.

The big debate on inflation is on Is inflation starting to take over the economy and has the Fed been asleep at the wheel? The latest monthly numbers offer some hope that inflationary pressures will start to recede as the supply bottlenecks fade and the economy downshifts to a more trend-like rate of expansion. The CPI data showed moderation and the PPI data, although high is still lower than the 1.2% increase we saw back in January. Monthly numbers do have ways of self-moderating and one month of headline data does not make a trend. Although the PPI data is stronger than expected and certainly stronger than the Fed would like, the CPI data shows that pricing is not out of control, yet. The Fed’s patience in acting on tapering asset purchases, let alone raising the interest rate, does seem to be justified, especially if the economy starts to slow and that is inevitable. However, the high rate of inflation is leading to increased talk about tapering among Fed members. The Fed will certainly know of the fall of the University of Michigan index. It will lead to an interesting talk at Jackson Hole.

Important Data Releases This Week

The July retail sales report will be released on Tuesday, August 17 at 8:30 AM. Retail sales were expected to slow this summer after their rapid recovery and the switch to more spending on services. June came in strong, rising 0.6% and the details showed people were getting back out.  Retail sales are expected to come in at only a 0.1% gain in July as COVID fears and increased prices limit some spending. It is unlikely the consumer will want to splurge on goods and appliances as they did last year. Spending on goods is likely to be more restrained but there is pent-up demand for services.

The July industrial production report will be released on Wednesday, August 18 at 8:30 AM. Industrial production increased 0.4% in June, as gains in mining and utilities production offset a slight decline in manufacturing. The slip in manufacturing came from a 6.6% decline in auto production linked to the shortage in semiconductors. The July ISM index showed some tentative signs of supply and demand coming into balance, as the supplier delivery index fell to a five-month low of 72.5. That still does not yet mean the supply bottleneck problem is finished, A slower pace of new orders is helping. We see industrial production easing 0.4% for July.

FTR is the leader in economic analysis and forecasting for the commercial freight and transportation equipment markets. For more information: Click here

Category: Monday Morning Coffee Tags:

About Steve Graham

Steve is one of the premier analysts in the transportation equipment industry. On a monthly basis Steve tracks and analyzes in detail the trailer and heavy-duty truck industry. Aside from following these two sectors he is also instrumental in helping our customers analyze the economy and its impact on transportation and transportation equipment.