- Vacancies increase from 205,000 to 11.5 million in March
- Employment drops 95,000 to 6.7 million
- Departures increase 152,000 to a record 4.5 million
WASHINGTON, May 3 (Reuters) – The number of vacancies in the United States rose to a record high in March as the shortage of workers persisted, suggesting that employers may continue to raise wages and help keep inflation uncomfortably high.
The Ministry of Labor’s survey on job openings and labor turnover, or the JOLTS report, on Tuesday also showed that a record high 4.5 million people voluntarily quit their jobs, which underlines the increasing wage pressure. The government reported last week that compensation to U.S. workers had the largest increase in more than three decades in the first quarter. read more
– For the economy, this points to another strong job report on Friday, and for workers, this still means strong wage increases, especially for those who change jobs, says Robert Frick, business economist at the Navy Federal Credit Union in Vienna, Virginia. “The situation is likely to continue well into the year given the Federal Reserve’s efforts to cool the labor market are unlikely to have an impact in several months.”
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Job openings, a measure of labor demand, increased by 205,000 to 11.5 million on the last day of March. The second monthly increase in a row lifted vacancies to the highest level since the series began in 2000. Retail led the rise, with a further 155,000 vacancies. Manufacturers of long-term goods reported 50,000 more vacancies.
But vacancies fell by 69,000 in the transport, warehousing and supply industries. State and local government education had 43,000 fewer vacancies, while vacancies in the federal government fell by 20,000.
Job openings increased in the south, but fell in the northeast, midwest and west. Economists asked by Reuters had predicted 11 million vacancies.
The job gap, which Goldman Sachs claims is a better measure of labor market austerity, increased to 5.6 million from 5.08 million, representing a record high of 3.4% of the workforce, up 0.3 percentage points from February .
According to Goldman Sachs, reducing the gap by half a million by 2.5 million will be enough to slow down the rapid wage growth.
The JOLTS data is being closely monitored by the Federal Reserve, which has taken an aggressive monetary stance as it fights sky-high inflation, with annual consumer prices rising at speeds last seen 40 years ago.
The US Federal Reserve is expected to raise interest rates by half a percentage point on Wednesday, and will probably start trimming its assets soon. The Fed raised its key interest rate by 25 basis points in March.
Shares on Wall Street traded higher. The dollar fell against a basket of currencies. The prices of US government bonds were generally higher.
“Traditionally, the Fed has focused on unemployment as a measure of the number of workers who cannot find work,” 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 companies that can not find workers. The Fed’s short-term policy goal is to curb total spending enough to reduce the redundant labor demand.”
The number of vacancies increased to 7.1%. It was up from 7.0% in February and corresponded with December’s record high. The number of vacancies increased in companies with 50 to 999 employees, but fell in companies with less than 50 employees.
Employment fell by 95,000 jobs to 6.7 million in March. The modest increase in production, professional and business services, as well as leisure and hospitality were offset by the decline in financial activities, education and health services, government and trade, transport and utilities.
There are now 70% more vacancies than new hires. There were a record 1.92 jobs per unemployed person in March.
“The persistent difficulties that employers face in filling positions will push wages higher and encourage employers to automate operations or find other efficiencies to cope with smaller staffs,” said Sophia Koropeckyj, senior economist at Moody’s Analytics in West Chester, Pennsylvania.
“These challenges will only grow as more baby boomers leave the workforce. Companies will open businesses in parts of the country with more available workers or at least will rely more on external workers living in areas with better demographics.”
With many jobs, workers quit in droves. Departures increased by 152,000, raising the total to a record 4.5 million. They were concentrated in the industry for professional and business services, where redundancies increased by 88,000. In the construction sector, the number of final placements increased by 69,000. The number of redundancies increased in the South and West.
The closing rate climbed back to an all-time high of 3.0% scaled at the end of 2021 from 2.9% in February. The interruption rate is seen by decision-makers and economists as a measure of confidence in the labor market. The higher closing frequency indicates that wage growth is likely to continue to build up as companies search for workers.
Layoffs increased in March, but remained at low levels. The layoff rate was 0.9% for the third month in a row.
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Reporting by Lucia Mutikani Editing by Paul Simao
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