WASHINGTON (Reuters) - U.S. job openings held near record highs in June amid a modest decline in hiring, pointing to further tightening labor market conditions, which economists hope will soon spur faster wage growth.
The monthly Job Openings and Labor Turnover Survey, or JOLTS, released by the Labor Department on Tuesday underscored labor market strength, which together with robust economic growth, likely paves the way for the Federal Reserve to raise interest rates in September.
"The labor market continues to run hot and this guarantees that more rate hikes are on the way," said Chris Rupkey, chief economist at MUFG in New York. "Fed officials are increasingly skeptical that this economy requires any monetary policy support whatsoever."
The U.S. central bank increased borrowing costs in June for the second time this year. The Fed forecast two more rate hikes by December. Job openings, a measure of labor demand, were unchanged at a seasonally adjusted 6.7 million in June. Vacancies hit an all-time high of 6.8 million in April.
The job openings rate was unchanged at 4.3 percent in June. There were an additional 20,000 jobs in the education sector, but vacancies declined by 84,000 jobs in the transportation,
warehousing, and utilities industry. There have been reports of a widespread shortage of truck drivers.
There are concerns that the worker shortage will at some point hinder economic growth. The economy grew at a 4.1 percent annualized rate in the second quarter, the fastest in nearly four years.
In June, hiring slipped by 96,000 to 5.7 million. The hiring rate dipped to 3.8 percent from 3.9 percent in May. But hiring in the finance and insurance industry increased by 31,000 in June.
While the number of Americans voluntarily quitting their jobs fell by 78,000 to 3.4 million in June, the quits rate, which policymakers and economists view as a measure of job market confidence, held at 2.3 percent for a fourth straight month.
"An elevated quit rate has important implications for income growth because workers typically secure new jobs paying about 5 percent to 10 percent more than their previous jobs," said Dante DeAntonio, an economist at Moody's Analytics in West Chester, Pennsylvania. "And employers will need to attract workers with better offers."
Wage growth as measured by average hourly earnings has remained moderate, increasing 2.7 percent year-on-year in July. The JOLTS report also showed layoffs increasing to 1.7 million in June from 1.6 million in May. That lifted the layoffs rate one-tenth of a percentage point to 1.2 percent.
"The June figure was on the high end of the range reported over the past two years, but still low by historic standards," said Daniel Silver, an economist at JPMorgan (NYSE:JPM) in New York.