WASHINGTON – Job openings stayed close to a 15-year high in May. It’s a sign that companies are expecting continued economic growth, but the level of advertised jobs hasn’t driven the same kind of increase in actual hiring.
The Labor Department said Tuesday that the number of open jobs rose 0.5 per cent to 5.36 million in May. April’s total was revised down to 5.33 million from 5.38 million, which had been the highest total during the 15 years that the government has tracked the data
The stronger confidence among employers has yet to boost an even stronger level of hiring and pay raises that would fuel faster economic growth. The number of new hires slipped somewhat in May for the second straight month, while the number of workers who chose to leave their jobs — a sign of strength since quits are generally associated with people finding better jobs — was basically unchanged.
The challenge may be that employers are struggling to find skilled workers at the salaries being offered. But they also may be hesitant to increase pay to attract more talented applicants. Companies could be vetting applicants more carefully, causing a lag between job postings and hiring.
“Measures of job turnover, which tend to lead wage acceleration, were disappointing,” said Jeremy Schwartz, an analyst at Credit Suisse. Hiring and job quits “have generally been stagnant since last autumn.”
The rate of workers quitting remains 9.2 per cent lower than it was in 2007, shortly before the Great Recession started, according to the Economic Policy Institute, a liberal think-tank .
Still, the additional job openings hint at the possibility that job growth and wages will eventually improve. The Federal Reserve is monitoring these factors for evidence of economic stability so that it can begin to raise interest rates from historic lows, a process that Fed officials have indicated could begin this year.
“These data add yet more weight to the idea that labour demand is rising very strongly, and that the biggest constraint on employers now is finding suitably qualified staff,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Job gains have been solid since February 2014, yet many Americans are still confronting financial uncertainties because of limited wage growth. On Friday, the government said employers added a robust 223,000 jobs in June. But average hourly wages have risen just 2 per cent over the past 12 months, slightly ahead of core inflation.
The unemployment rate fell to 5.3 per cent last month from 5.5 per cent. However, the seemingly positive sign actually reflected a negative for the economy: More people became discouraged and gave up searching for work, causing the government to no longer count these people as jobless.
The figures reported in last Friday’s jobs report are a net total: Jobs gained minus jobs lost. The data reported Tuesday, in the Job Openings and Labor Turnover survey, are more detailed. They calculate total hires, as well as quits and layoffs. Tuesday’s JOLTS data contain figures for May, and are a month behind last week’s jobs report.
Employers may be posting more job openings, but many have been slow to hire. Total hiring in May fell to 5 million from 5.03 million in April and 5.09 million in March.
Quits fell in May to 2.70 million from 2.71 million in April, after having reached a seven-year high in January.
An increase in both hiring and people quitting can cause wage growth to accelerate. That’s because people typically quit when they have a new job lined up, usually for higher pay. And when firms move to fill more open jobs, particularly as the unemployment rate declines, they often need to offer more pay to attract workers.