More people are quitting their jobs... but that’s a good thing... but not as much of a good thing as people are saying it is.

Let me just break that down.

The US bureau of labor statistics have released a report showing that more than two million Americans quit their jobs in February – a record since November 2008.

Deep in what has been called a jobless recovery, this is a little hard to figure out.

But nonetheless it is good – a sign of economic confidence, as pointed out by ConvergEx Group – who said in a note to clients that it’s a sign the job market is improving.  People tend to hang onto their jobs in a downturn, worried they won’t find another.  In September 2009, the number of quits fell to 1.6m, a record.

As the Wall Street Journal [2] noted,

Quits matter for another reason, too: They’re a component of “churn,” the regular comings and goings that are a critical element of any healthy job market. When people leave jobs in search of higher pay and new opportunities, they open up opportunities for others. When they stop quitting, those opportunities dry up.

They continue.

Churn is a big deal. A new paper [3] by Edward Lazear of Stanford and James Spletzer of the Bureau of Labor Statistics finds that during the recent recession, 80% of the drop in hiring was due to low levels of churn, rather than reduced job creation. The authors estimate reduced churn shaved two-fifths of a percentage point off GDP for the duration of the recession.

Two notes of caution, however. Although just out, these are last month's figures, so reflect the Febuary upturn - March's job data was significantly worse. We should lump this news in with last month's - further evidence that The US economy had a good Febuary - rather than using it to comment on the current situation.

Second, as the Wall Street Journal article points out, "churn" only happens when job opportunities come available after people quit. If companies are downsizing, this jobs data means very little.