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Making sense of seasonal adjustments to job quits

Over the past few years, job quits has been one of the more closely watched labor market metrics. But not everyone has been monitoring the same exact data series. FRED has two versions of quits: one seasonally adjusted, one not seasonally adjusted. Both measure the number of times workers left their job (excluding retirements), but different audiences may find one version more suitable to their needs.

The unadjusted series shows how late fall into winter seems to be a particularly unpopular time to leave one’s job, while activity picks up during the summer. Consider how a desire to receive a holiday bonus might prevent people from leaving their jobs during November and December, how students heading back to school can lead to a wave of turnover in August, or how the flip to a new year could spur some workers to want a fresh start at a new job in January.

For some users of FRED, these data can provide valuable insights to inform action planning. If company leaders know that the winter likely won’t see much change, they can use that time to prepare for the potential attrition at other points in the year. Or a savvy employee could leverage these data to negotiate a retention bonus, threatening to join the summer exodus if their employment needs aren’t met.

But for other users, the unadjusted data series is unnecessarily messy. The frequent movement from month to month comes at the expense of being able to clearly see longer-term trends. The seasonally adjusted series removes the impact of factors specific to certain times of the year, resulting in a much smoother line.

For economists and policymakers, the adjusted data make it much easier to analyze how underlying factors impact worker movement. When the seasonally adjusted number of quits changes over an extended period, it signals that economic conditions, policies, and other factors have led to changes in worker behavior. This perspective is behind past FRED blog posts (such as here, here, and here) that have reported on seasonally adjusted quits.

One series isn’t better than the other; but, depending on what you’re analyzing, one may be a better fit for your specific purpose.

How this graph was created: Search FRED for “quits” and click on “Quits: Total Nonfarm” to create a graph with the seasonally adjusted version of the data. Then, from the “Edit Graph” panel, use the “Add Line” tab to search for and select the non-seasonally adjusted version of the same name (you may find it easiest to search using the series code “JTUQUL”).

Suggested by Andrew Spewak.

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