(Bloomberg) -- Job openings in the U.S. decreased in June from the highest level on record as hiring picked up.
The number of positions waiting to be filled declined by 108,000 to 5.25 million from a revised 5.36 million in May that was the most since data began in 2000, a report from the Labor Department showed Wednesday. The rate of hiring was the strongest this year.
The data signal employers are filling the vacancies they currently have before posting more, as they also wait for more evidence that the U.S. can weather any weakness that ripples from financial shocks abroad.
Federal Reserve policy makers are looking for some additional improvement in the labor market to ensure that the economy can withstand the first increase in the central bank’s benchmark interest rate since 2006.
“The labor market in the U.S. remains solid, demand for labor remains solid and labor-market slack continues to diminish,” said Jesse Hurwitz, a U.S. economist for Barclays Plc in New York. “There’s less slack left in U.S. labor markets than the Fed thinks.”
The median forecast in a Bloomberg survey of economists projected 5.35 million openings in June.
More context
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, Fed Chair Janet Yellen follows the report as a measure of labor- market tightness and worker confidence.
The report showed job openings fell at hotels and restaurants, construction companies and factories.
Some 2.75 million people quit their jobs in June, up from the prior month’s 2.73 million.
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.
“In Yellen’s view, that is a sign of workers’ confidence in the labor market,” Ryan said. “You wouldn’t be quitting your job unless you have better prospects.”
The number of people hired climbed to 5.18 million, pushing the hiring rate up to 3.7 percent, the highest since December, 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.
More firings
Total dismissals, which exclude retirements and those who left their job voluntarily, increased to 1.79 million from 1.66 million in May.
In the 12 months ended June, the economy created a net 2.7 million jobs, representing 60.6 million hires and 57.9 million separations.
There are about 1.6 unemployed people vying for every opening, compared with 1.8 when the 18-month recession began in December 2007, the figures show.
Wednesday’s report follows the July employment report from the Labor Department, which showed companies continued to expand headcount last month while keeping a lid on wage growth. Payrolls climbed by 215,000 and the unemployment rate held at a seven-year low of 5.3 percent, while average hourly earnings climbed a less-than-forecast 2.1 percent from a year earlier.
That may be enough to indicate “some further improvement” in the labor market that the Fed has said it needs to see before the increase their benchmark interest rate, which has lingered near zero since 2008. Additionally, officials need to be “reasonably confident” that inflation will move back to its 2 percent goal in the medium term.
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