Record high US job openings, resignations likely to fuel wage inflation

  • Job openings increased from 205,000 to 11.5 million in March
  • Hiring drops from 95,000 to 6.7 million
  • 152,000 increased to a record 4.5 million

WASHINGTON, May 3 (Reuters) – US job openings rose to a record high in March as labor shortages persisted, suggesting employers could continue to raise wages and help keep inflation uncomfortably high. can.

The Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS report, also showed Tuesday that 4.5 million people left their jobs voluntarily, underscoring the mounting wage pressure. The government reported last week that the first quarter saw the biggest increase in US workers’ compensation in more than three decades. read more

“For the economy, this points to another strong jobs report on Friday, and for workers, it means continuing strong wage growth, especially for those who change jobs,” said in Vienna, Virginia. said Robert Frick, corporate economist at Navy Federal Credit Union. “Given the Federal Reserve’s efforts to cool the labor market, the situation will continue to bode well this year, probably not gaining traction for months.”

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Job openings, a measure of labor demand, rose by 205,000 to 11.5 million on the last day of March. The second consecutive monthly increase brought job openings to the highest level since the series began in 2000. The retail sector led the growth, with an additional 155,000 vacant jobs. Manufacturers of long-haul goods reported 50,000 more vacancies.

But job openings in the transportation, warehousing and utility industries decreased by 69,000. There were 43,000 fewer vacancies in state and local government education, while job openings in federal government decreased by 20,000.

Employment opportunities increased in the South but declined in the Northeast, Midwest and West. Economists polled by Reuters had estimated 11 million vacancies.

The job-workers gap, which Goldman Sachs argues, is a better measure of labor market tightness, widened from 5.08 million to 5.6 million, up 0.3 percentage points from February, an all-time high of 3.4% of the labor force. is responsible for.

According to Goldman Sachs, narrowing the gap to 2.5 million would be enough to slow the rapid pace of wage growth.

Shock

The JOLTS data is being closely watched by the Federal Reserve, which has taken an aggressive monetary policy stance as it battles skyrocketing inflation, with annual consumer prices rising at rates seen 40 years ago.

The US central bank is expected to hike interest rates by half a percentage point on Wednesday, and may soon begin reducing its asset holdings. The Fed raised its policy interest rate by 25 basis points in March.

Stocks were trading higher on Wall Street. The dollar fell against a basket of currencies. US Treasury prices were mostly higher.

“Traditionally, the Fed has focused on unemployment as the number of workers who can’t find jobs,” said Lou Crandall, chief economist at Wrightson ICAP in Jersey City, New Jersey. “In today’s environment, the Fed is more focused on the number of firms that can’t find workers. The Fed’s near-term policy goal is to slow aggregate spending to reduce excess demand for labor.”

The job opening rate climbed to 7.1%. It was up from 7.0% in February and matched December’s all-time high. The rate of job openings increased in establishments with 50 to 999 employees, but declined in businesses with fewer than 50 employees.

Hiring fell from 95,000 jobs to 6.7 million in March. Moderate growth in manufacturing, professional and business services, and leisure and hospitality were offset by declines in financial activities, education and health services, government, and trade, transportation and utilities.

There are now 70% more jobs available than new recruits. There were a record 1.92 jobs per unemployed person in March.

“The continued difficulty that employers have to fill positions will lead to increased pay and prompt employers to automate operations or find other efficiencies,” said Sofia Koropekij, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

“These challenges will only increase as more baby boomers leave the labor force. Companies will begin operations in parts of the country with more available workers or at least rely more on remote workers living in areas with better demographics.”

With jobs in abundance, workers are leaving jobs in large numbers. Quits increased by 152,000, bringing the total to a record 4.5 million. They were concentrated in the professional and professional services industry, where resignations increased by 88,000. In the construction sector, quits increased by 69,000. Dropout numbers increased in the South and West.

The abandonment rate climbed back to an all-time high of 3.0% at the end of 2021 from 2.9% in February. The job loss rate is viewed by policy makers and economists as a measure of job market confidence. The high leaving rate suggests that wage inflation will continue to build as companies scramble for workers.

Layoffs increased in March but remained at a low level. The layoff rate stood at 0.9% for the third month in a row.

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Reporting by Lucia Muticani Editing by Paul Simao

Our Standards: Thomson Reuters Trust Principles.

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