‘Positive’ Job Openings Report Says ‘Quits’ Are Down, Which Could Push Wage Growth

On the heels of last week's May 2015 Employment Summary in which the Bureau of Labor Statistics (BLS) reported job gains of 280,000 for May, the BLS reported the number of job openings rose to 5.4 million on the last business day of April in the April 2015 Job Openings and Labor Turnover Summary  released Tuesday.

The 5.4 million job openings as of the end of April, which represented a rate of 3.7 percent, was the highest point since the series began in December 2000, according to BLS. April's total of 4.9 million separations (a rate of 3.5 percent) was little changed from March, but a slight decrease in the quits rate down to 1.9 percent (2.7 million quits) in April suggests that workers may be looking to better their situations, which could push wage growth in the coming months – a factor economists say will be a key driver in homeownership growth and new household formation. The number of layoffs and discharges (involuntary separations) was little changed from March to April at 1.8 million (1.3 percent), according to the BLS.

"Employment indicators are always relevant for housing as job growth and strength are correlated with growth in home prices and home sales," Realtor.com Chief Economist Jonathan Smoke said. "April’s positive Job Openings and Labor Turnover Survey data announced this morning are in sync with last week’s strong employment report and indicate headline job openings are up by 5.2 percent from March’s revised 5.1 million to 5.4 million, the highest level recorded since the series began in 2000. New hires remained at 5 million. According to the April survey, the quit rate (voluntary separations) ticked down slightly to 1.9 percent from 2.0 percent, but remain in a range last seen in 2007. This level suggests workers are also starting to seek better opportunities in the labor market, which would drive higher wages and income later in the year."

Last week's Employment Summary for May and Tuesday's JOLTS report for April suggest that the market is ready for the Federal Reserve to increase interest rates, according to Smoke.

"With interest rates now riding on how employment and inflation trend this year, today’s strong data provides further support for formal action by the Fed before the year is over," Smoke said. "As the financial markets adjust to anticipate such a move, we could see near-term increases in mortgage rates, just like we saw last week, as the average 30-year fixed rate ended the week above 4.1 percent with a strong May employment report."