WASHINGTON (Reuters) - U.S. job openings jumped to a record high in January, but a persistent lag in hiring suggested that employers will probably have to raise wages to attract qualified workers.
The monthly Job Openings and Labor Turnover Survey, or JOLTS, released by the Labor Department on Friday underscored labor market strength and supported expectations that the Federal Reserve could raise interest rates a bit more aggressively this year than is currently anticipated.
Job openings, a measure of labor demand, increased by 645,000 to a seasonally adjusted 6.3 million. That was the highest level since the data series started in December 2000 and pushed the job openings rate up four-tenths of a percentage point to 4.1 percent.
“We believe employers are going to have to pay up to fill the openings, leading to stronger wage growth and sustained consumer spending increases,” said Ron Temple, head of U.S. equities at Lazard Asset Management in New York.
Wage growth has remained moderate despite the unemployment rate falling to a 17-year low of 4.1 percent. Economists expect wage increases to pick up in the second-half of the year, which should lift inflation toward the Fed’s 2 percent target.
Many economists believe the U.S. central bank will at some point raise its forecast to four interest rate hikes in 2018 from three, because of sustained labor market strength and economic growth. Fed officials meet next Tuesday and Wednesday, and are expected to increase borrowing costs at the end of that meeting.
The surge in job openings was broad-based. There were 215,000 additional vacancies in the professional and business services industries. Transportation, warehousing and utilities had 113,000 more job openings and construction companies had an additional 101,000 unfilled positions.
Hiring rose to 5.6 million in January from 5.5 million in December. The hiring rate edged up one-tenth of a percentage point to 3.8 percent. The economy created 313,000 jobs in February.
“There is now a record 0.94 job openings per unemployed person,” said John Ryding, chief economist at RDQ Economics in New York.
Other details of the JOLTS report were mixed. The number of workers voluntarily quitting their jobs fell 69,000 to 3.3 million in January. The quits rate, which the Fed looks at as a measure of job market confidence, slipped to 2.2 percent in January from 2.3 percent the prior month.
Economists believe that modest wage growth is hindering the mobility of workers.
“Mobility and wage growth can be a chicken or egg type of problem. Without those increased wage offers, workers don’t have a reason to change jobs,” said Cathy Barrera, chief economist at ZipRecruiter.
“It will be interesting to see what strategy employers use to fill these 6.3 million job openings. Will they tap into some hidden labor market slack, or will they start to recruit from other firm’s workforces?”
Layoffs rose 107,000 to 1.8 million in January, lifting the layoffs rate one-tenth of a percentage point to 1.2 percent. Despite the rise, which was driven by the construction and leisure and hospitality industries as well as the healthcare and social assistances sector, layoffs remain very low.
Reporting By Lucia Mutikani; Editing by Andrea Ricci