Hints of U.S. Labor Market Strength

Further hints are surfacing that the job market in the United States is recovering.

The total number of job openings and overall demand in hiring new employees has grown at a strong pace. According to a new study by the Bureau of Labor Statistics, the total number of job openings rose to 5.4 million by the end of April, the highest number recorded since the BLS began tracking.

Further hints are surfacing that the job market in the United States is recovering.

The total number of job openings and overall demand in hiring new employees has grown at a strong pace. According to a new study by the Bureau of Labor Statistics, the total number of job openings rose to 5.4 million by the end of April, the highest number recorded since the BLS began tracking.

Meanwhile, the total number of Americans leaving their jobs has also remained at historical highs, at about 2.7 million total quits by the end of April. The total quits rate was 1.9%, higher than the layoff and discharge rate of 1.3%, indicating more voluntary separations from jobs and a higher churn rate in the labor market.

Additional voluntary quits is seen by many economists as a leading indicator of labor market strength, as more workers quitting indicates that they feel confident in their ability to find new jobs or find profitable ventures elsewhere.

At the same time, an increase in the total job openings is seen as a sign that there is greater aggregate demand for labor, which could drive wages higher. So far, for 2015, incomes have remained mostly flat in the U.S. in real terms.

Optimistic Businesses

With improvements in the labor market, expectations that aggregate demand and consumer spending may rise have boosted some economists’ forecasts for the future. Two large investment banks have recently told clients that they expect U.S. GDP to rise in the second quarter, after falling in the first quarter. The initial slump is being dismissed as seasonal weakness caused by port closures on the west coast and very cold weather in the northeast.

At the same time, small businesses are also hinting at an improvement in aggregate demand, even as hints of a more robust labor market could suggest their labor costs are set to rise. According to the national Federation of Independent Business, the Small Business Optimism Index rose 1.4 points to 98.3, the best reading so far in 2015.

Additionally, the NFIB said small businesses are hiring more aggressively, with small business owners adding “a net 0.13 workers per firm over the past few months.” Meanwhile, 29% of small business owners said they are unable to fill jobs, the highest reading since April 2006.

While the survey does show a net improvement of most components of the SBO index, NFIB Chief Economist Bill Dunkelberg insists the readings show a modest improvement in economic conditions. “The NFIB May survey results confirm that the economy is moving ahead, but at an uninspiring pace. Owners do what is necessary, like hiring workers when needed, to keep up with growth mostly powered by an increasing population,” he said.