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Job openings rise to 3-month high, keeping pressure on the Fed




The numbers: The number of US job vacancies climbed in April to a three-month high of 10.1 million, another sign that the economy has not cooled enough to prevent more rate hikes by the Federal Reserve.

Economists polled by the Wall Street Journal had predicted job postings to total 9.5 million.

The number of job vacancies is seen as a sign of the health of the labor market and the broader US economy. Job postings have fallen from a record high last spring, but they are still much higher than the Fed would like.

The Fed wants to see job openings and hiring slow even more to ease the upward pressure on inflation.

Meanwhile, the number of people leaving their jobs fell slightly, to 3.79 million. Closings fell below 4 million in January for the first time since mid-2021[ads1], but they have been moving sideways since then.

By virtually all measures, the labor market remains historically strong.

Key details: Job openings increased most in retail, healthcare, transport and warehousing – parts of the economy that have led the way in hiring.

Entries fell in manufacturing, government and leisure and hospitality.

While many openings are never actually filled, economists look at the trend in job postings as a rough gauge of how strong the job market is.

The number of vacancies for each unemployed person rose to 1.8 in April from 1.7 the month before, keeping it well above pre-pandemic levels of 1.2.

The Fed is watching the ratio closely and wants to see it fall back to pre-pandemic norms.

The so-called termination rate among private employees was unchanged at 2.7%. It peaked at 3.3% a year ago.

People quit more often when they think it’s easy to get a better job and tend to stay when the economy weakens.

The US is forecast to add a solid 188,000 new jobs in May. The work report for May is due on Friday.

Big picture: The Fed is concerned that a tight labor market – too many jobs and not enough workers – will make it harder to get inflation under control.

Companies pay more to attract talent and pass those costs on to customers. Labor is the biggest expense for most companies.

Recent US inflation readings and consumer spending reports have also been stronger than expected.

The result: The Fed may be forced to consider whether to raise interest rates again at the meeting on 13-14. June instead of skipping an 11th straight increase. Senior central bank officials had hoped to hold on for a while to assess the effect of previous rate hikes on the economy.

Looking forward: “In short, demand for labor has moderated but is still burning,” said Stephen Stanley, chief economist at Amherst Pierpont Securities.

Market reaction: Dow Jones Industrial Average

DJIA

and the S&P 500

SPX

extended losses in Wednesday trading after the jobs opening report. Bond interest

TMUBMUSD10Y

fell to 3.67%.



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