U.S. job openings exploded back to life in May. The new Job Openings and Labor Turnover report from the US Bureau of Labor Statistics now show that these openings have skyrocketed to 7.769 million. That figure far surpasses market expectations, which were at 7.3 million. It represents a concrete rebound from April’s bottomed-out total of 7.395 million job openings. On Tuesday, Census JOLTS dropped new data. This data paints a picture that the labor market is robust and still recovering.
The unexpected spike in job openings continues to point to the high demand for new workers in just about every sector. This developing trend will be another key signal into the economy’s overall health, as employers look to bring more people on board. Experts said this increase will shape how the administration approaches employment policy and economic predictions moving forward.
In fact, despite job openings rising, the BLS noted relative stability across other employment measures, including hires and total separations. Hires were unchanged at 5.5 million for the month. At the same time, total separations remained flat at 5.2 million.
Job Market Stability
While job openings rose and fell in different places, the labor market as a whole was still rather solid in May 2023. In terms of hires and total separations, BLS observed that the increase on the month was not statistically significant.
“Over the month, both hires and total separations were little changed at 5.5 million and 5.2 million, respectively.” – US Bureau of Labor Statistics (BLS)
These figures indicate that employers are increasing their job placements. Workers are still exiting the labor market at a normal pace, both in terms of voluntary quits and involuntary layoffs. Quits were about 3.3 million and layoffs and discharges were at 1.6 million indicating a balanced, positive jobs market.
Workers are deeply pondering their moves as they continue to feel the effects of a shifting economy. This new equilibrium between job openings and employee movement is a lagging indicator of these workplace changes.
Impact on Currency Markets
The increase in job openings had instant repercussions on financial markets, most notably impacting the US Dollar (USD) Index. Following the release of the JOLTS data, the USD Index surged back from session lows. This increase is a sign that investors are acknowledging and responding to the strength of the labor market.
During the latest available data, the USD Index had held steady on the day, trading flat at 96.75. We see a very good relationship between job openings and the strength of the currency. When this currency comes in the form of employment figures improving, consumer spending and overall economic growth usually follow, which strengthens the value of USD.
Market analysts will be closely monitoring how these job openings will influence Federal Reserve policies regarding interest rates and inflation in the coming months.
Future Economic Implications
The implications of the new reality of higher job openings go beyond pocketbook concerns. After all, a strong job market often helps drive consumer confidence, which spurs more spending and, in turn, economic growth. As employers continue to fight for good talent, wages are expected to increase, potentially spurring even more economic activity.
The increased level of quits and the persistence of layoffs showcases a tight, competitive job market. Workers remain unwilling to leave jobs or professions. This hesitance could have detrimental effects on labor mobility and wage growth in the short term.
From ongoing supply chain disruptions to increasing demands for corporate responsibility from consumers, companies are navigating uncertain and difficult times. To be successful in the long run, they need a predictable workforce. The knowledge to be found in the JOLTS report will surely help to guide careful considerations of strategy for both business and policymakers.