U.S. Job Openings Soar as Small Businesses Grow Bullish

Job openings continue to grow at a breakneck pace in the United States as the job market continues to repair itself.

Five million job openings were available in the United States in January, the highest number since January 2001. While the figure was a slight increase from December, it was a 28% increase from the same period a year ago.

Job openings continue to grow at a breakneck pace in the United States as the job market continues to repair itself.

Five million job openings were available in the United States in January, the highest number since January 2001. While the figure was a slight increase from December, it was a 28% increase from the same period a year ago.

The sharp rise in job openings on a year-over-year basis is partly due to unseasonably cold weather that halted economic activity relative to a year ago. The impact of the cold weather is most prominent in the number of job openings in the northeast, which rose 35% year-over-year in January. The Midwest, which was also affected by very cold weather in 2014, saw a 22% gain.

However, secular trends indicate strong economic conditions are also apparent in the south and west, where job openings rose 33% and 22%, respectively. These regions mostly escaped cold weather in 2014.

More Jobs, More Worker Confidence

Hiring activity has also seen strong gains, rising 7.3% year-over-year in January, while the total number of quits rose over 17% year-over-year and gained month-over-month to 2.8 million.

An increase in quits is considered an important leading indicator of consumer confidence and economic activity. In contractionary periods, Americans hesitate to voluntary leave their jobs for fear of facing a difficult labor market. An increase in quits, then, suggests that more Americans are confident that they can find better working conditions or pay elsewhere.

At the same time, layoffs have fallen by 4.7% on a year-over-year basis and 3.2% on a month-over-month basis.

Analysts believe the continued strength in the job market could have a mixed impact on the United States. While rising aggregate demand from a stronger workforce could lift overall GDP, a tightening of the market could also encourage the Federal Reserve to raise their interest rate target in 2015. Such a move could invert the yield curve, which is usually a leading indicator of an economic contraction.

Small Businesses Bullish

With more jobs, small businesses owners are also feeling more confident about the economy.

A new study by the National Federation of Independent Businesses shows small businesses are investing more in human capital, with more job openings and a rise in the Small Business Optimism Survey Index, which rose to 98.0. “In spite of slow economic activity and awful weather in a lot of the country, small business owners are finding reasons to hire and spend which is great news,” said NFIB Chief Economist Bill Drunkelberg.

Job openings, credit conditions, and plans to increase inventories all saw gains from January, while capital-spending expectations are at their highest point since late 2007.