BUSINESS

US job openings in August near 14-year high, yet actual hiring dropped steeply

10/07/2014 10:29 EDT | Updated 12/07/2014 05:59 EST
WASHINGTON - U.S. employers advertised the most job openings in nearly 14 years during August, yet their pace of hiring fell compared to July.

The number of available jobs rose 230,000 to 4.84 million during the month, the Labor Department said Tuesday. Restaurants, hotels and health care providers drove much of the increase, which resulted in the most openings since January 2001.

But total hiring fell 294,000 to 4.64 million, driven by declines in construction and retail. This suggests a potential mismatch between the wages employers are willing to pay and the skills of the workers available to be hired.

Still, the report suggests that employers expect economic growth to continue, creating a need for more workers. The September jobs report showed that employers added 248,000 jobs last month, as the unemployment rate slid to 5.9 per cent from 6.1 per cent.

"This is more evidence that we should expect further robust gains in employment over the next few months and, consequently, further declines in the unemployment rate," said Paul Ashworth, chief U.S. economist at Capital Economics.

The big question is when wage growth will meaningfully surpass inflation. Average hourly wages are up just 2.3 per cent over the past 12 months.

Tuesday's report, known as the Job Openings and Labor Turnover survey or JOLTS, provides a more detailed look at the job market than the monthly employment report. It includes figures for overall hiring, as well as the number of quits and layoffs. The monthly jobs figures are a net total of job gains or losses.

Federal Reserve Chair Janet Yellen has been closely monitoring JOLTS data as she considers when the Fed should begin to raise short-term interest rates from near-zero levels.

Job openings have climbed 23 per cent in the past 12 months, a clear sign that employers are searching for additional workers. Net job gains have also improved as the economy has added 2.64 million new jobs over the past 12 months. The economy is currently on pace to add the most jobs since 1999.

Yet the pace of hiring still lags the advertised demand from employers. Hiring has only risen 1 per cent in the past 12 months.

This spread between openings and hirings is a sign that some employers are struggling to find workers with the skills they need. Or, employers may need to boost the pay being offered to bring in better applicants.

The number of Americans who quit their jobs last month was little changed, at 2.47 million, the JOLTS report showed. More people quit their jobs in a healthy economy because they are more likely to find new, typically higher-paying, jobs. Quits fell sharply in the recession but have since recovered. Yet they are still below the 2.8 million that is typical in a healthy economy.