Surprise increase in job vacancies signals strength in US labor market

Company News

by Glenn Dyer

New figures released on Tuesday have further confounded views about the health of the US economy and labor market, which appear to be stronger than expected, with an unexpected rise in vacancies in May following a deeper-than-reported fall in April.

Vacancies were forecast to fall again in May for the fourth successive monthly drop, but data from the US Bureau of Labor Statistics told a different story.

The number of job openings rose by 221,000 from the previous month to 8.14 million in May, topping market consensus of 7.91 million. This follows a downwardly revised figure of 7.919 million in April, which was the lowest in three years, revised down from the initially reported figure of 8.059 million.

May's figure was still down by 1.2 million from a year ago, indicating the jobs market is cooler than it was but not dying.

The 8.14 million vacancies still far exceed the number of people reported as unemployed in May, which stood at 6.6 million.

Unemployment has risen by half a million people as vacancies have fallen by 1.2 million, and a total of 509,000 new jobs were created in the year to May.

Openings amounted to 4.9% of total employment, up from 4.8%, as US employers hired 141,000 more workers in May than in April.

Total private job openings ticked up to 7.06 million in May from 7.01 million.

The number of people quitting their jobs or being laid off barely changed, with a variation of around 8,000, which is a rounding error in a report covering millions of positions. May saw job openings increase in state and local government, excluding education (+117,000), durable goods manufacturing (+97,000), and federal government (+37,000), while openings fell in accommodation and food services (-147,000) and in private educational services (-34,000).

June employment numbers are due out on Friday. Analysts predict a slowing in job growth to 189,000 positions added, compared to 272,000 in May. However, they completely missed the sharp rise in May, which could be a one-off occurrence.

The unemployment rate is expected to remain unchanged at 4%, and wage growth is tipped to slow to 4% annually, down from 4.1% in April (which saw a small rise).

The jobs report is timed at the end of the month, so the unexpected rise of 272,000 jobs in the monthly labor force report was the result of a survey conducted a fortnight earlier. Both the vacancies and the higher jobs figure contradict the market's expectation of a cooling labor market, which would keep the Federal Reserve happy.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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