A record number of help-wanted signs in April pushed job openings above hires for the first time ever, signaling wage pressures will be on the horizon.
The number of private-industry positions waiting to be filled jumped to 4.89 million, the most in data back to December 2000, from 4.63 million in March, the Labor Department reported Tuesday in Washington. That outpaced the number of workers hired, which dropped to 4.67 million from 4.76 million.
“It signals a tightening labor market,” said Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC in New York. “That presumably means it’s becoming more difficult for firms to fill those openings, which normally would argue for a pickup in wage growth.”
As vacancies mount and unemployment wanes, employers will be pressured to boost wages in order to attract the most talented workers. The report contains some of the metrics Federal Reserve Chair Janet Yellen tracks to determine the health of the job market as policy makers discuss when to raise interest rates.
Stocks were little changed, after equities reached a two-month low. The Standard & Poor’s 500 Index climbed less than 0.1 percent to 2,080.15 at the close in New York.
The 261,000 increase in private-industry openings for April was the largest since February 2013. Vacancies in health care jumped by 100,000 to 910,000, while retailers sought 543,000 employees, almost 30,000 more than in March.
All openings, including government, rose by 267,000 to 5.38 million, also a record high in the Labor Department data.
On Yellen’s Radar
The Job Openings and Labor Turnover Survey, or JOLTS, adds context to monthly payrolls figures by measuring dynamics such as resignations, help-wanted ads and the pace of hiring. Although it lags the Labor Department’s other jobs data by a month, Yellen follows the report as a measure of labor-market tightness and worker confidence.
Some 2.7 million people quit their jobs in April, little changed from March, Tuesday’s report showed. The quits rate, which was 2 percent when the recession started at the end of 2007, fell to 1.9 percent in April from 2 percent in March.
“The measures of the strong economy are pointing in the same direction,” Labor Secretary Tom Perez said in a June 5 phone interview. “People don’t quit unless they think they’re going to get a better job.”
The hiring rate -- the number of people who got new jobs divided by the number who worked or were paid -- fell to 3.5 percent in April from 3.6 percent. Hires decreased to 5.01 million from 5.09 million, according to Tuesday’s figures.
The report follows figures last week that showed employers added 280,000 workers to payrolls in May, more than forecast, and the unemployment rate edged up to 5.5 percent from 5.4 percent as more Americans entered the workforce.
In another sign of a tightening job market, the number of workers saying they are so discouraged by job prospects that they’ve given up looking dropped by 193,000 in May to 563,000, the fewest since October 2008, according to last week’s report from the Labor Department.
Another report today showed other parts of the economy were emerging from a first-quarter slump. Sales by wholesalers climbed 1.6 percent in April from the prior month, the biggest gain since March 2014. Distributors also boosted inventories by 0.4 percent, more than forecast, indicating stockpiling for better times will contribute to economic growth this quarter.
The April job postings data showed the employment picture has remained resilient after the strongest year for job gains since 1999, even as other parts of the economy suffered under a stronger dollar, West Coast port labor disruptions and severe weather in the first quarter. Monthly job gains have averaged 217,400 so far this year after an average 259,670 in 2014.
Wage growth has been slower to materialize in this expansion. Average hourly earnings showed more signs of life in May, with the year-over-year increase in wages climbing to 2.3 percent for the highest since August 2013. A separate Labor Department measure of paychecks, the Employment Cost Index, rose in the first quarter by the most since the end of 2008.
Employers including Dublin, California-based Ross Stores Inc. are seeing faster pay increases on the horizon.
“We expect wage rates are going to move up over the next few years,” Chief Financial Officer Michael Hartshorn said in a May 21 earnings call. Even as labor costs rise, “there is a silver lining here in that the customer has more money in their pocket because of higher wage rates that could well help our top line as well.”
About 1.6 people are vying for every opening, compared with about 1.8 when the last recession began in December 2007, according to Tuesday’s report.
In the year that ended in April, employers added a net 2.8 million jobs, representing 60 million hires and 57.2 million separations.
(A previous version of this story corrected the change in firing rate.)
For more, read this QuickTake: Full Employment Demystified