Labor Market Turnover Signal

Signal Summary:

• The Labor Market Turnover Differential signal is currently in a Bearish regime as of November 2025 (1). This indicates a softening in labor market conditions.
• Conviction Band: Low, Interpretation Confidence: Mixed Signals, Internal Conflict Flag: Yes.

Key Dynamics:

• The quits rate (2.0%) still exceeds the layoff rate (1.1%), yielding a positive raw differential of 0.9 percentage points for 2025-11-01.
• However, the robust z-score of this differential has fallen to -0.67, crossing the -0.50 threshold that triggers a Bearish classification.
• This suggests weakening worker confidence and declining labor market dynamism, despite quits still outpacing layoffs on an absolute basis.
• Conditional Invalidation: The robust z-score of the turnover differential rises above -0.50, which would transition the signal to a Neutral regime.

Scenario Balance:

• Base Case dominant: Continued labor market softening with the z-score remaining below -0.50, reflecting ongoing declines in worker confidence.
• Downside secondary: The raw turnover differential turns negative, or the z-score drops further below -1.0, signaling significant labor market deterioration.
• Upside residual: The robust z-score rebounds above -0.50 due to an unexpected surge in quits or a further fall in layoffs, shifting the signal to Neutral.

Time Horizon & Aggregation:

• Time Horizon: Cyclical (months), as it tracks shifts in labor market dynamics that evolve over several months and are relevant to business cycle phases.
• Aggregation Weight Hint: Medium, given its importance as a labor market barometer; however, the internal conflict between the raw level and z-score suggests careful weighting.

Macro Relevance:

• This signal primarily informs the US Labour Market dimension, indicating shifts in tightness or slack and reflecting worker sentiment.
• A Bearish reading often signifies a mid-to-late cycle phase, preceding broader economic slowdowns or increased recession risk.
• It typically interacts with other labor market indicators (e.g., job openings, unemployment rate) and consumption data, potentially confirming a broader easing trend.

Data & References:

• JTSQUR: Quits Rate (2.0%, 2025-11-01).
• JTSLDR: Layoffs & Discharges Rate (1.1%, 2025-11-01).
• The `Turnover_Diff_z` (-0.67) is the most influential datapoint for the current Bearish regime, with `Turnover_Diff_pp` (0.9) providing important context.
• Additional public datasets that would improve depth: Employment Composition Signal (2) and Labor Market Tightness Signal (3).