US job openings jumped to a record high in June, outpacing hiring, the latest indication that companies are having trouble finding qualified workers.
The monthly Job Openings and Labor Turnover Survey (JOLTS) released by the US Department of Labor on Tuesday also underscored labor market strength that will likely encourage the US Federal Reserve to continue tightening monetary policy despite benign inflation and concerns about consumer spending.
“Companies are running out of workers to hire to do the job or even train to do the work, and this is a ticking time bomb for economic growth,” said Chris Rupkey, chief economist at MUFG in New York. “Today’s JOLTS data bring a September meeting balance sheet unwind announcement a little closer to reality.”
JOLTS, is one of the job market metrics on Fed Chairwoman Janet Yellen’s so-called dashboard.
Economists expect the US central bank will announce a plan to start reducing its US$4.2 trillion portfolio of Treasury bonds and mortgage-backed securities at its next policy meeting next month.
However, tame inflation and worries about consumer spending amid tepid wage growth and faltering motor vehicle sales suggest that the Fed might delay raising interest rates again until December.
The bank has increased borrowing costs twice this year.
Job openings, a measure of labor demand, increased by 461,000 to a seasonally adjusted 6.2 million. That was the highest level since the data series started in December 2000 and pushed the job openings rate up two-tenths of a percentage point to a near one-year high of 4 percent.
The monthly increase in job openings was the largest since July 2015. The surge in job openings was almost broad-based.
There were 179,000 additional vacancies in the professional and business services industries. The health care and social assistance sector had 125,000 more job openings and construction companies had an additional 62,000 unfilled positions.
In June, job openings were concentrated in the midwest and west regions.
The ratio of job openings to unemployment hit a 16-year high. Hiring was little changed at 5.4 million in June, leaving the hiring rate steady at 3.7 percent.
The gap between job openings and hiring points to a skills mismatch, which was also corroborated by a separate report on Tuesday from the National Federation of Independent Business, which showed job openings at a 16-year high last month.
Small businesses cited a lack of skills as the main reason for the vacancies. Others also blamed “unreasonable” wage expectations, attitude, appearance as well as drug addiction for disqualification of job seekers.
Economists are optimistic that tightening labor market conditions will spur faster wage growth. Annual wage growth has struggled to break above 2.5 percent, contributing to inflation persistently running below the Fed’s 2 percent target.
“The JOLTS report continues what has been a reasonably strong run for the labor market data and we expect continued improvement in the job market to keep upward pressure on wages,” said Daniel Silver, an economist at JPMorgan in New York.
Other details of the JOLTS report were mixed. About 3.1 million US employees voluntarily quit their jobs in June, down from 3.2 million in May. As a result, the quits rate, which the Fed looks at as a measure of job market confidence, dipped to 2.1 percent from 2.2 percent in May.
Layoffs rose 28,000 to 1.7 million in June, lifting the layoffs rate one-tenth of a percentage point to 1.2 percent.
“Layoff rates are historically low. But the recent increase may be worth watching,” said Jed Kolko, chief economist for job Web site Indeed in San Francisco.
CHIP WAR: Tariffs on Taiwanese chips would prompt companies to move their factories, but not necessarily to the US, unleashing a ‘global cross-sector tariff war’ US President Donald Trump would “shoot himself in the foot” if he follows through on his recent pledge to impose higher tariffs on Taiwanese and other foreign semiconductors entering the US, analysts said. Trump’s plans to raise tariffs on chips manufactured in Taiwan to as high as 100 percent would backfire, macroeconomist Henry Wu (吳嘉隆) said. He would “shoot himself in the foot,” Wu said on Saturday, as such economic measures would lead Taiwanese chip suppliers to pass on additional costs to their US clients and consumers, and ultimately cause another wave of inflation. Trump has claimed that Taiwan took up to
A start-up in Mexico is trying to help get a handle on one coastal city’s plastic waste problem by converting it into gasoline, diesel and other fuels. With less than 10 percent of the world’s plastics being recycled, Petgas’ idea is that rather than letting discarded plastic become waste, it can become productive again as fuel. Petgas developed a machine in the port city of Boca del Rio that uses pyrolysis, a thermodynamic process that heats plastics in the absence of oxygen, breaking it down to produce gasoline, diesel, kerosene, paraffin and coke. Petgas chief technology officer Carlos Parraguirre Diaz said that in
SUPPORT: The government said it would help firms deal with supply disruptions, after Trump signed orders imposing tariffs of 25 percent on imports from Canada and Mexico The government pledged to help companies with operations in Mexico, such as iPhone assembler Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康科技集團), shift production lines and investment if needed to deal with higher US tariffs. The Ministry of Economic Affairs yesterday announced measures to help local firms cope with the US tariff increases on Canada, Mexico, China and other potential areas. The ministry said that it would establish an investment and trade service center in the US to help Taiwanese firms assess the investment environment in different US states, plan supply chain relocation strategies and
Japan intends to closely monitor the impact on its currency of US President Donald Trump’s new tariffs and is worried about the international fallout from the trade imposts, Japanese Minister of Finance Katsunobu Kato said. “We need to carefully see how the exchange rate and other factors will be affected and what form US monetary policy will take in the future,” Kato said yesterday in an interview with Fuji Television. Japan is very concerned about how the tariffs might impact the global economy, he added. Kato spoke as nations and firms brace for potential repercussions after Trump unleashed the first salvo of