Job openings unexpectedly increased in May to the highest level on record, a sign the U.S. labor market will keep bolstering the world’s largest economy.
The number of positions waiting to be filled rose by 29,000 to 5.36 million from a revised 5.33 million in April, a report from the Labor Department showed Tuesday. It marked the second month that openings exceeded hiring, which was little changed.
More job listings and waning dismissals underscore the need to increase headcount as companies cater to rising demand, laying the ground for wages to pick up down the line. The report, which includes some metrics tracked by Federal Reserve Chair Janet Yellen, is in sync with her view that the employment outlook is improving though some weakness remains.
“The labor market continues to improve,” Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York, said before the report. “The underlying trend in consumer spending is good. We’re at a point where companies need to keep hiring.”
The median forecast in a Bloomberg survey of economists projected 5.3 million openings in May after a previously reported 5.38 million a month earlier. The Labor Department began keeping records in December 2000.
The Job Openings and Labor Turnover Survey, or JOLTS, adds context to monthly payrolls data by measuring dynamics such as resignations, help-wanted ads and the pace of hiring. Although it lags the Labor Department’s other jobs figures 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 May, little changed from the prior month. The quits rate, which shows the willingness of workers to leave their jobs, held at 1.9 percent and compares with a 2 percent reading when the recession started at the end of 2007.
Total dismissals, which exclude retirements and those who left their job voluntarily, decreased to 1.65 million from 1.78 million a month before.
In the latest report, job openings rose at professional and business services, retailers and restaurants.
The number of people hired was little changed at 5 million, while the hiring rate eased to 3.5 percent from 3.6 percent. The gauge calculates the number of hires during the month divided by the number who worked or received pay during that period.
In the 12 months ended in May, the economy created a net 2.8 million jobs, representing 60.2 million hires and 57.4 million separations.
The latest figures indicate there are about 1.6 unemployed people vying for every opening, compared with about 1.8 when the 18-month recession began in December 2007.
The JOLTS data follows the June payrolls report from the Labor Department, which showed job creation advanced while wages stagnated. The U.S. added 223,000 workers last month after 254,000 in May. The jobless rate fell to a seven-year low of 5.3 percent. Average hourly earnings at private employers rose 2 percent over the 12 months ended in June, matching the average gain in the current expansion.
The progress in the labor market is among the reasons Fed policy makers are considering starting to raise the benchmark interest rate from near zero. Yellen has also said she expects the first rate increase in 2015, and that subsequent increases will be gradual.
“Although progress clearly has been achieved, room for further improvement remains,” she said at a June 17 press conference.
Sustained job creation together with a pickup in wages will help to accelerate consumer spending, which accounts for almost 70 percent of the economy.
Tyson Foods Inc., the largest U.S. chicken processor, is among business expanding their staff. The company in June said it will create 90 jobs at a Kentucky facility.
Among the ones that are paring workers is American Apparel, which announced on Monday that it will close stores and lay off employees to cut costs. It did not say how many shops or jobs will be affected.