WASHINGTON (Reuters) -U.S. job openings unexpectedly rose in April and data for the prior month was revised higher, pointing to persistent strength in the labor market that could compel the Federal Reserve to raise interest rates again in June.
The Job Openings and Labor Turnover Survey, or JOLTS report, from the Labor Department on Wednesday also showed layoffs declining significantly last month. There were 1.8 job openings for every unemployed person in April, up from 1.7 in March.
The report added to data this month, including consumer spending, in suggesting that the economy regained speed at the start of the second quarter.
Demand has remained resilient despite 500 basis points worth of interest rate increases from the Fed since March 2022, when the U.S. central bank embarked on its fastest monetary policy tightening campaign since the 1980s to tame inflation. The flow of strong data has diminished expectations that the Fed could pause further rate increases next month.
“This is not what the Fed was hoping to see,” said Priscilla Thiagamoorthy, a senior economist at BMO Capital Markets in Toronto.
Job openings, a measure of labor demand, increased by 358,000 to 10.1 million by the last day of April. Data for March was revised higher to show 9.75 million job openings instead of the previously reported 9.59 million. The April data ended three straight monthly decreases in job vacancies. Economists polled by Reuters had forecast 9.375 million job openings.
The increase in job vacancies was led by retail trade, where there were an additional 209,000 openings. There were 185,000 more job openings in healthcare and social assistance, while vacancies jumped by 154,000 in the transportation, warehousing, and utilities. Notable increases were also reported in construction as well as finance and insurance industries.
But job openings declined in durable goods manufacturing, which has seen demand for goods slowing as higher interest rates increase the cost of credit. Spending is also shifting back to services. The job openings rate rose to 6.1% from 5.9% in March.
U.S. stocks were trading lower. The dollar rose against a basket of currencies. U.S. Treasury prices were higher.
FEWER RESIGNATIONS
Financial markets saw a roughly 70% chance of the U.S. central bank raising its policy rate by another 25 basis points at its June 13-14 meeting, according to CME Group’s FedWatch Tool. Minutes of the Fed’s May 2-3 policy meeting, which were published last week, showed policymakers “generally agreed” the need for further rate hikes “had become less certain.”
Some economists are, however, skeptical that the JOLTS report is offering a clear read of the labor market.
According to Goldman Sachs economist Ronnie Walker, a low response rate to the survey, which has reduced the sample size, could be distorting the JOLTS data, noting that some alternative measures of job openings from LinkUp and ZipRecruiter, have declined sharply in the past year.
But Walker also acknowledged that some of the alternative measures of job openings could be downwardly biased, as their sample could be skewed toward companies which are more likely to have an online presence and have cut job openings sharply.
“As a result, we suspect that the ‘true’ level of job openings lies somewhere in the middle of the range implied by JOLTS and alternative measures of job openings,” said Walker in a note.
The JOLTS report showed layoffs fell 264,000 to 1.6 million, consistent with the very low levels of weekly unemployment claims data. Layoffs decreased by 113,000 in construction, one of the sectors hardest hit by the Fed’s aggressive monetary policy tightening campaign.
There were also notable declines in information, leisure and hospitality as well as healthcare and social assistance.
Fewer people quit their jobs last month, pushing the quits rate down to 2.4% from 2.5% in March. The quits rate is viewed as a measure of labor market confidence. Resignations declined in professional and business services, healthcare and social assistance as well as durable goods manufacturing.
“This suggests that the labor market is slackening, despite the reported increase in job openings, and that workers are increasingly sheltering in place in their jobs as better alternatives become less available,” said Julia Pollak, chief economist at ZipRecruiter.
(Reporting by Lucia Mutikani; Editing by Paul Simao and Andrea Ricci)
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