The number of job openings in the United States rose to record levels in the month of April. At the same time employers were reported to be experiencing trouble getting suitable workers, an indication that the labor market is tightening. The Department of Labor’s Job Openings and Labor Turnover Survey (JOLTS) which is released monthly also hinted that the slowing down of job growth that was registered recently was a consequence of skills mismatch and not a decline in the demand for labor.
“These data underscore the difficulty in hiring new workers, which we think is increasingly likely to be a factor restraining payroll growth going forward,” RDQ Economics’ chief economist, John Ryding, said.
Fed Policy meeting
The JOLTS report was released ahead of a meeting of the U.S. Federal Reserve that will be held on June 13 and 14. During that policy meeting it is expected that the Fed will increase the interest rate by about 25 basis points.
The gap being experienced between hiring and job openings is indicative of a skills mismatch. A National Federation of Independent Business report released last week revealed that the number of owners of small businesses who had job positions they were unable to fill in the month of May was at the highest level in 17 years. In May, 138,000 jobs were created in the economy and this was the below the monthly average of job gains for the last 52 weeks.
Economists are of the view that the tightening in the labor market will lead to faster growth in wages. Even with the fall in the unemployment rate to 4.3%, the lowest level in 16 years, the gains in wages has remained sluggish.
According to the JOLTS report, a total of 1.6 million workers were declared redundant in the month of April. This was just about the same figure that was registered in March. The discharge and layoff rate has remained at 1.1% for the last five months. As for the number of workers quitting their jobs voluntarily, the figure fell by 111,000 in April to 3 million. The quit rate consequently decline to 2.1% down from 2.2% which was recorded in March. The U.S. Federal Reserve Bank uses the quits rate to determine job market confidence.
With full employment likely having been reached in the United States economists say that the focus will now shift from worrying about labor demand to worrying about labor supply.