Job Openings Rose in April, Defying Cooling Trend

The data complicates the interest-rate outlook.

The jump in openings may put pressure on the Federal Reserve to take interest rates even higher.

The statistical relationship between high job vacancies, as calculated by the government, and low unemployment has been frequently cited by the Federal Reserve chair, Jerome H. Powell, as a key sign of the labor market being “unsustainably hot” and “clearly out of balance, with demand for workers substantially exceeding the supply of available workers.”

But even as some economists remain unsatisfied with the progress on subduing prices, others worry that reliance on job openings as a core measure of labor market balance may lead the Fed to keep the cost of borrowing for businesses and households too high for too long, prompting a harsher downturn than necessary.

“The quits rate is nearly back to prepandemic levels, the hires rate has already reverted to prepandemic pace,” Skanda Amarnath, the executive director of Employ America, a nonprofit that supports tight labor markets, wrote in a note. “JOLTS data should not drastically color this broader assessment of labor market tightness but will matter at the margins for the Fed’s own perception of labor market heat.”

Some question how much weight to give the report.

After peaking at a record of around 12 million in March 2022, job openings as measured by the government have fallen overall. For the past year, a mix of strong hiring for positions that were already listed and a decline in business sentiment have led to a pullback in newly created listings. But the April uptick is at least a pause in recent trends.

Some economists think the JOLTS report should be taken with a grain of salt. Gregory Daco, the chief economist at EY-Parthenon, said the bump in listings could reflect summer hiring in the rebounding service sector, though he added, “I’d want to see June before assuming that summer hiring is stronger than last year.”

The report is based on a survey of about 21,000 nonfarm business and government establishments. The economic research team at Goldman Sachs has made the case that since the response rate to the JOLTS report has fallen sharply since the start of the pandemic, “these findings argue for currently treating JOLTS less like the ‘true’ level of job openings.”

The May jobs report will be the next gauge.

The May employment report, to be released by the Labor Department on Friday, will fill out the labor market picture before Fed policymakers meet on June 13 and 14.

Economists surveyed by Bloomberg expect the data to show the addition of 195,000 jobs on a seasonally adjusted basis, down from 253,000 in the initial report for April. Unemployment, which was 3.4 percent in April — matching the lowest level since 1969 — is expected to rise to 3.5 percent, and the month-over-month increase in wages is expected to ease.