Job openings in the US economy jumped to a record high in January, and hiring rates suggest that businesses are having difficulty filling open positions.
The Bureau of Labor Statistics released results from the monthly Job Openings and Labor Turnover Survey (JOLTS) of Friday, showing that job openings in the economy rose to 6.3 million in January. This is up 645,000 from December’s levels and marks the highest number of job openings in the economy since the series began in 2000.
Job openings are one of several measures of labor market strength, indicating the availability of employment in the economy. Openings were generally strong throughout the course of 2017 despite tailing off at the end of the year. Hires failed to keep pace in Friday’s release, rising by a more modest 59,000 in January.
This combination provides more evidence that wages may soon rise in the economy. The combination of scarcity of workers and persistently sluggish wage growth make it difficult to lure workers into employment. Businesses may soon be forced to offer higher pay in an attempt to attract potential employees and fill open positions.
Transportation openings surge as hires fall
Results from the transportation and logistics space help illustrate this situation in the broader economy. Job openings in transportation, warehousing, and utilities rose by 113,000 in January to 305,000, both record highs for the entirety of the series. Despite the plentiful opportunities, hires within the industry actually declined during the month, even after accounting for seasonal patterns in January hiring.
Again, this would suggest that businesses in the industry are struggling to fill their existing positions. As a result, it is likely that more and more owners and employers will begin offering higher pay (or improved working conditions) in an effort to attract more workers and fill the existing gap. Hires data often lag behind surges in openings, and it will interesting to see whether or not the improve hiring seen in the sector in February continues going forward to fill the open positions.
Behind the numbers
The JOLTS survey is another in a string of releases that show that the labor market in the economy is strong. The openings data, combined with strong growth in employment and low jobless claims, would suggest that market conditions are already fairly tight and getting tighter.
It is also worth noting that, of the indicators concerning labor market health, the JOLTS data has the longest lag between activity and data release. Friday’s report contains data from January, while the Labor Department’s employment report covers February activity, and data on jobless claims is weekly though early-March.
The question going forward continues to revolve around when the acceleration in wage growth is going to arrive. Low wage growth in the economy overall limits worker mobility and makes it more difficult for businesses and workers to match skills with available opportunities. This problem and the ability to lure marginalized portions of the population back into the labor force are unlikely to be resolved until workers’ pay and benefits increase.
Ibrahiim Bayaan is FreightWaves’ Chief Economist. He writes regularly on all aspects of the economy and provides context with original research and analytics on freight market trends. Never miss his commentary by subscribing.