Record U.S. job openings, quits rate boost wage growth outlook

FILE PHOTO: People attend the Executive Branch Job Fair hosted by the Conservative Partnership Institute at the Dirksen Senate Office Building in Washington, U.S., June 15, 2018. REUTERS/Toya Sarno Jordan/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job openings surged to a record high in July and more Americans voluntarily quit their jobs, pointing to sustained labor market strength and confidence that could soon spur faster wage growth.

The Labor Department’s monthly Job Openings and Labor Turnover Survey, or JOLTS, released on Tuesday also suggested a further tightening in labor market conditions, with employers appearing to increasingly have trouble finding suitable workers.

While the tightening labor market could boost wage gains, some economists warned that worker shortages could over time negatively impact economic growth. The JOLTS report cemented expectations the Federal Reserve will raise interest rates at its Sept. 25-26 policy meeting. The Fed has raised rates twice this year.

“The economic expansion is on a collision course with a lack of workers to man the shop floors, work the restaurants and stores at the shopping malls across America,” said Chris Rupkey, chief economist at MUFG in New York. “No workers, no growth, it’s that simple.”

Job openings, a measure of labor demand, increased by 117,000 to a seasonally adjusted 6.9 million in July. That was the highest level since the series started in December 2000. The jobs openings rate was 4.4 percent, unchanged from the previous month and an all-time high first touched in April.

The current level of job openings means there is a job for every one of the 6.2 million people who were unemployed in August. Hiring was little changed at 5.7 million in July, keeping the hiring rate at 3.8 percent for a second straight month.

There were 46,000 unfilled jobs in the finance and insurance industry in July. Nondurable goods manufacturing had 32,000 vacancies. The job opening rate in the overall manufacturing industry climbed to a record high of 3.8 percent in July from 3.6 percent in June.

But job openings in the retail trade industry fell by 85,000. There were also decreases in education and federal government job vacancies in July.


The scarcity of workers was also corroborated by a survey of small businesses published on Tuesday. The NFIB survey found that job openings at small businesses hit a 45-year high in August. A record number of businesses reported they could not find qualified workers to fill open positions.

According to the NFIB, job openings were mostly prevalent in construction, manufacturing and wholesale trade. There was also a dearth of truck drivers.

“Looming shortages of qualified workers could prove detrimental to business expansion plans in coming months,” Dante DeAntonio, an economist with Moody’s Analytics in West Chester, Pennsylvania. “In the meantime, the increasing tightness in the labor market is spurring more workers to re-enter the workforce as well as leave their jobs in search of better opportunities.”

The worker shortages, especially for truck drivers, are already contributing to bottlenecks in the supply chain, which could slow the vibrant economy. The economy grew at a 4.2 percent annualized rate in the second quarter, almost double the 2.2 percent pace set in the January-March period.

Growth this year is expected to top 3 percent.

The Labor Department’s JOLTS report also showed the robust labor market is giving Americans confidence to quit their jobs for other positions. The quits rate increased to 2.4 percent in July, the highest level since April 2001, from 2.3 percent in June. Fed officials look at the quits rate as a measure of job market confidence.

The increase in job mobility supports economists’ optimism that job growth may be finally on a faster path. The government last week reported a surge in annual wage growth in August, with average hourly earnings increasing 2.9 percent, the largest gain since June 2009, from 2.7 percent in July.

Wage gains have largely remained moderate even as the unemployment rate has dropped to near an 18-year low of 3.9 percent.

“Workers are leveraging the tighter labor market to find new opportunities and employers are poaching workers from other firms,” said Nick Bunker, an economist at job search website Indeed in Washington. “The next question is how more quitting will translate into higher wage growth.”


(Reporting by Lucia Mutikani; Editing by Paul Simao)

Americans voluntarily quitting jobs as labor market tightens

: A help wanted sign is posted on the door of a gas station in Encinitas, California, U.S., September 6, 2013.

By Lucia Mutikani

WASHINGTON (Reuters) – The number of American workers voluntarily quitting their jobs jumped in December to the highest level in nearly 17 years, in a strong show of confidence in the labor market which further bolsters expectations of faster wage growth this year.

The Labor Department’s monthly Job Openings and Labor Turnover Survey (JOLTS) report published on Tuesday came on the heels of news last week that annual wage growth in January was the strongest in more than 8-1/2 years. The labor market is almost at full employment.

The number of workers willingly leaving their jobs increased by 98,000 to 3.259 million, the highest level since January 2001. That lifted the quits rate to a 2.2 percent from 2.1 percent in November. This rate, which the Federal Reserve looks at as a measure of job market confidence, has rebounded from a low of 1.3 percent in late 2009.

“I had thought that by now, the fear of moving to another company would have faded,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “It really hadn’t very much, though maybe it is finally happening.”Rising job turnover boosts economists’ optimism that wage growth will accelerate this year and in turn help to push inflation toward the Fed’s 2 percent target. While economists remain confident that the U.S. central bank will increase interest rates at least three times this year, much would depend on the fortunes of the U.S. stock market.

Stocks on Wall on Monday recorded their biggest drop since August 2011 as concerns over rising U.S. interest rates and government bond yields hit record-high valuations of stocks.

“The data today are likely to keep the Fed on the path of gradual rate hikes this year as long as the stock market stabilizes from its death plunge the last two weeks,” said Chris Rupkey, chief economist at MUFG in New York.

“Labor market conditions are picture perfect today, but that can change in a hurry if worsening financial conditions and plunging markets take a toll on business confidence.”

The JOLTS report also showed that job openings, a measure of labor demand, decreased 167,000 to a seasonally adjusted 5.8 million. Still, job openings are not too far from a record high of 6.2 million touched in September.

The decline in job openings in December was led by the professional and business services sector, which saw a decrease of 119,000. Job openings in the retail trade sector fell 85,000 while vacancies in construction dropped 52,000.

But job openings in the information sector increased 33,000 and the federal government had an additional 13,000 vacancies in December. The jobs openings rate slipped one-tenth of a percentage point to 3.8 percent in December.

Hiring was little changed at 5.49 million.

“The recent moderation across much of the JOLTS data is not alarming to us given that levels still remain favorable across much of the data and that we have been expecting the pace of job growth to cool relative to the recent strong gains,” said Daniel Silver, an economist at JPMorgan in New York.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)