Job openings in the U.S. eased in March from an almost five-year high, indicating employers are waiting to see how the economy performs as federal budget cuts take effect.
The number of positions waiting to be filled declined by 55,000 to 3.84 million from a revised 3.9 million the prior month that were the most since May 2008, the Labor Department said today in Washington. Hiring decelerated and firings climbed, the report also showed.
Bigger strides in the pace of hiring are needed to propel wage gains and drive the U.S. economy at the same time Americans contend with higher taxes. Limited job openings indicate companies may be reluctant to add staff amid signs the expansion is slackening this quarter.
“The pace of improvement in the labor market is slowing along with growth, but job growth is still strong enough to bring the unemployment rate down over time,” Dean Maki, chief U.S. economist in New York for Barclays Plc, said before the report. “Both things can be true at the same time, and that’s where we think we are.”
Today’s report sheds light on the government’s monthly employment data. Payrolls grew by 138,000 workers in March, a step down from the 332,000 pace in February that was the fastest in almost three years, the Labor Department reported last week. Job creation accelerated in April, with payrolls rising by 165,000.
The number of workers hired in March fell to 4.26 million, pushing the hiring rate down to 3.2% from 3.3%, according to today’s report.
Job openings slipped most at professional and business services, followed by health care and social assistance. They climbed among retailers and hotels and restaurants.
The number of dismissals climbed to 1.69 million in March, a four-month high, from 1.57 million the prior month. Another 2.16 million quit their jobs, down from 2.29 million in the prior month. The combination kept the total separations rate at 3.1% in March for a third month.
In the 12 months ended in March, the economy created a net 1.7 million jobs, representing 51.8 million hires and about 50.1 million separations, today’s report showed.
Considering the 11.7 million Americans who were unemployed in March, the figures indicated there were about 3 people vying for every opening, up from about 1.8 when the recession began in December 2007.
Federal Reserve officials have indicated they’re waiting to see additional evidence that recent employment gains will prove durable before adjusting their policy stance. The bankers said on May 1 they plan to keep buying $85 billion of bonds per month to facilitate labor market progress and that they are prepared to raise or lower the pace as the economic outlook evolves.
In deciding “whether there has been a substantial improvement in the outlook for the labor market” that could change the central bank’s policy, Fed Vice Chairman Janet Yellen said she will monitor data beyond the figures provided by the government’s monthly employment report.
“Layoffs and discharges as a share of total employment have already returned to their pre-recession level, while the hiring rate remains depressed,” Yellen said during a March 4 speech. “Therefore, going forward, I would look for an increase in the rate of hiring.”
A pickup in the rate at which people quit their jobs will also provide a clue that the labor market is recovering, Yellen said. More workers leaving their position in search of another indicates they are confident about prospects and that demand for labor has strengthened, she said.
Companies that are hiring, such as Burlington Northern Santa Fe LLC, could change the picture for Yellen. Matt Rose, the railroad’s chief executive officer, said during a May 6 interview on Bloomberg Television that his company will increase its staff by about 1% this year to accommodate demand from increased energy production and consumer spending.
Another sign pointing to employment gains, advertisements for job openings posted online are also becoming more plentiful. The number of help-wanted ads rose in April to 5.1 million, reaching the highest level in records going back to 2005, according to data compiled by the Conference Board.
At the same time, economists project the pace of economic growth will cool this quarter, limiting employers’ need to hire. The nation’s gross domestic product will expand at a 1.5% annualized pace from April through June, down from a 2.5% rate in the prior three months, according to a Bloomberg survey from April 5 to April 9.
The slowdown comes as higher taxes pinch consumers, factories reduce inventory building and production and the government cuts back planned outlays.