Labor Market Turnover Signal

Signal Summary:

• Configuration statement: Given a Quits Rate of 2.0, a Layoff Rate of 1.2, and a Robust Z-Score of -0.72 (1), this setup aligns with Downward-biased price paths and Indeterminate volatility, where the dominant risk is Trend continuation, not mean reversion.
• The signal is currently in a persistent Bearish regime, reflecting a labor market that is loosening as involuntary separations outpace voluntary exits on a standardized basis (1).
• Conviction Band: High; Interpretation Confidence: High Confidence; Internal Conflict Flag: Yes. Signal Stability Assessment: Stable; Threshold Proximity: Near; Revision Sensitivity: High.

Methodology Applied:

• A Bearish regime is triggered if the Turnover Differential is < -0.20 OR the Robust Z-Score is < -0.50 (1).
• Falling Z-scores are interpreted as an early warning for rising unemployment risk and economic slowdown (1).
• Bullish regimes require both the Differential and Z-score to exceed 0.50 simultaneously (1).
• Labor Market Turnover Signal (2026-03-01) (1).

Key Dynamics:

• The dominant driver is the Turnover_Diff_z (-0.72), which satisfies the Bearish threshold despite a positive nominal differential of 0.8 (1).
• Internal Conflict: A tension exists between the positive absolute spread (0.8) and the negative Z-score, suggesting turnover is weak relative to historical norms.
• Conditional Invalidation: The Bearish interpretation would be invalidated if the Turnover_Diff_z rises above -0.50 (1).
• The signal has demonstrated persistence, remaining in or near Bearish territory for the majority of the last six months.

Scenario Balance:

• Base case dominant: Continued labor loosening as Quits remain stagnant while Layoffs show stability at higher standardized levels.
• Upside risk: A sharp decline in Layoffs below 1.0, triggering a shift toward Neutral or Bullish regimes.
• Downside risk: A further drop in the Quits Rate below 1.9, signaling a collapse in worker confidence.

Time Horizon & Aggregation:

• Time Horizon: Cyclical (months). This is a slow-moving confirmation signal within the labor pillar (1).
• Aggregation Weight Hint: Medium, due to the one-month reporting lag and sensitivity to annual BLS revisions (1).

Macro Relevance:

• Informs the labor demand and worker confidence dimension of macro aggregation (1).
• Implied mechanism: Reduced worker outside options and rising employer-driven separations signal a transition toward economic slowdown.
• Cycle position: Not determined by methodology.
• Interacts with Job Openings and Unemployment data to validate labor market slack (1).

Regime Context:

• The Bearish regime is persistent, having been the dominant state since late 2024 with only brief Neutral interludes (1).
• Direction of change: Stabilising at Bearish levels.

Model Limitations:

• Subject to significant one-month reporting lags and prone to noise that can cause false regime flips (1).
• Material annual BLS revisions can retroactively alter regime history (1).

Data & References:

• Labor Market Turnover Signal (Latest: 2026-03-01) (1).
• Most influential datapoints: Quits Rate (2.0) and Layoff Rate (1.2) (1).
• Public datasets: JOLTS Hires (JTSHIR) and Job Openings (JTSJOL) would provide secondary confirmation.