U.S. job openings increased by the most in five years in April, but the surge likely overstates the labor market’s health, as hiring declined against the backdrop of economic uncertainty stemming from the Iran war.
The Job Openings and Labor Turnover Survey, or JOLTS report, from the Labor Department on Tuesday also showed resignations dropped to the lowest level in nearly six years in April, a sign of lack of confidence in the jobs market.
The professional and business services industry accounted for roughly 91% of the jump in job openings in April. Economists said the labor market had not shifted from its “slow-hire, slow-fire” mode, warning of downside risks from the three-month U.S.-backed war with Iran, which has caused shortages and boosted the prices of commodities, including energy products and aluminum.
“The labor market remains mostly stable,” said Matthew Martin, senior U.S. economist at Oxford Economics. “Without a concrete end to the war in Iran in sight, higher oil prices will reduce aggregate demand by crimping real incomes. Coupled with increased uncertainty, businesses are likely to pull back further on hiring intentions.”
Job openings, a measure of labor demand, had surged by 731,000 to 7.618 million by the last day of April, the highest level since May 2024, the Labor Department’s Bureau of Labor Statistics said. Economists polled by Reuters had forecast 6.88 million unfilled jobs.
Professional and business services job openings jumped by 668,000, which some economists said was an anomaly.
“Sharp drops in openings in this sector in previous months have been revised away as more data have been collected,” said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. “It is just as likely that April’s big increase in openings also proves illusory.”
Health care and social assistance had an additional 89,000 unfilled positions. There were increases in vacancies in the construction, manufacturing, transportation, warehousing and utilities industries as well as at state and local governments. Job openings in the finance sector decreased by 134,000, all of them in finance and insurance.
Accommodation and food services vacancies dropped by 74,000 while retail trade had 43,000 fewer unfilled positions.
The job openings rate jumped to 4.6% from 4.2% in March.
Labor Market Has Regained Footing
Nearly all of the increase of 684,000 private sector job openings occurred at businesses with one to nine employees.
The labor market has regained its footing after wobbling last year under the weight of uncertainty, largely from import tariffs. Just as the drag from trade policy was lifting, the war with Iran, which has raised gasoline and diesel prices, has cast a cloud over the labor market and could be impacting hiring.
Hires dropped 419,000 to 5.116 million in April, suggesting the solid increase in nonfarm payrolls that month was mostly due to lower layoffs. The nearly broad-based decline was led by a decrease of 131,000 in professional and business services.
Retail trade hires fell by 81,000. There were also notable declines in hiring in the transportation, warehousing and utilities, finance, healthcare and social assistance, and accommodation and food services sectors.
The hires rate fell to 3.2% from 3.5% in March. The U.S. employment report for May, due to be released on Friday, is likely to show nonfarm payrolls increased by 85,000 jobs last month after two back-to-back months of gains in excess of 100,000, a Reuters survey of economists predicted. The unemployment rate is forecast to have held steady at 4.3%.
With hiring weak, fewer workers are job-hopping.
Resignations in April dropped by 183,000 to 2.977 million, the lowest level since August 2020 when the nation was in the throes of the COVID-19 pandemic. The decline was the largest in a year. The quits rate, viewed by policymakers and economists as a measure of job market confidence, slipped to 1.9% from 2.0% in March.
The lower quits rate suggests wage inflation is not an issue for the Federal Reserve as it confronts rising and broadening price pressures due to the Middle East conflict. Financial markets expect the U.S. central bank will keep its benchmark overnight interest rate in the 3.50%-3.75% range into 2027. Inflation increased at its fastest pace in three years in April, the government reported last week.
Though employers are not boosting headcount, they are not engaging in mass layoffs, anchoring the labor market. Layoffs and discharges dropped by 192,000 to 1.692 million in April. There were fewer layoffs in the professional and business services, retail trade and construction industries. But they increased in the accommodation and food services sector.
The layoffs rate fell to 1.1% from 1.2% in the prior month.
“Neither employees nor employers are looking to make changes to employment in the near term,” Oxford Economics’ Martin said.
(Reporting by Lucia Mutikai; Editing by Andrea Ricci and Paul Simao)
