U.S. job openings surged to a record high in July, but a lag in hiring suggested employers were struggling to find qualified workers to fill the positions.
The monthly Job Openings and Labor Turnover Survey, or JOLTS, released by the Labor Department on Wednesday also pointed to tightening conditions in the labor market, which could spur faster wage growth.
JOLTS, is one of the job market metrics on Federal Reserve Chair Janet Yellen’s so-called dashboard. It was published ahead of the U.S. central bank’s Sept. 20-21 policy meeting at which the Fed is widely expected to leave interest rates unchanged.
“There are millions of jobs going begging right now in what has got to be one of the biggest mismatches between skills and lack of qualified help available in the nation’s history,” said Chris Rupkey, chief economist at MUFG Union Bank in New York. “The economy seems strong enough to weather a rate hike.”
Job openings, a measure of labor demand, increased 228,000 to a seasonally adjusted 5.9 million, the Labor Department said. That was the highest level since the series started in December 2000 and pushed the jobs openings rate up one-tenth of a percentage point to 3.9% in July.
Hiring was little changed at 5.2 million in July, keeping the hiring rate steady at 3.6% for a second straight month. But hiring slowed in August, with non-farm payrolls increasing by 151,000 jobs, a report showed last week. The economy added a total of 546,000 jobs in June and July.
Although Fed officials view the labor market as being at or near full employment, concerns about persistently low inflation have left the U.S. central bank cautious about raising interest rates in the near term.
Job openings were almost across the board. There were big increases in construction, retail, leisure and hospitality, as well as professional and business services.
In a sign of confidence in the labor market, three million Americans voluntarily quit their jobs in July, keeping the quits rate at 2.1% for a second straight month. This rate has rebounded from a low of 1.3% in early 2010.
Layoffs were little changed at 1.6 million in July, holding the layoffs rate at a 3-1/2-year low of 1.1%. The ratio of job openings to unemployment hit a 15-year high.
“This suggest wages should be pressured higher and, therefore, either price increases will pick up or profit margins will be squeezed further,” said John Ryding, chief economist at RDQ Economics in New York.
Despite tightening labor market conditions, wage growth has been frustratingly slow. Average hourly earnings have failed to hold above 2.5% on a year-over-year basis. Economists say a growth rate of between 3 and 3.5% in wages is needed to bring inflation near the Fed’s 2% target.