March 17, 2016 10:30 AM, EDT

Job Openings Increase in January to 5.54 Million

Daniel Acker/Bloomberg News

Job openings outpaced hiring in January, consistent with further improvement in the U.S. labor market.

The number of positions waiting to be filled increased by 260,000 to 5.54 million, from 5.28 million in the prior month that was less than previously estimated, a report from the Labor Department showed March 16. The January level was the third-highest since records began in 2000. Hiring and quits, however, both eased.

Elevated job listings and waning dismissals indicate sustained demand for workers that has the potential of adding to wage pressures. The report, which includes some measures tracked by Federal Reserve Chair Janet Yellen, corroborates the central bank’s view that the labor market continues to strengthen.

“It’s still a very good reading on job openings,” said Stan Shipley, an economist at Evercore ISI in New York. “Demand for workers is running faster than we thought. Businesses will have to boost wages.”

The median forecast in a Bloomberg News survey projected 5.5 million openings after a previously reported 5.61 million the month before.

The Job Openings and Labor Turnover Survey, or JOLTS, adds context to monthly payrolls data by measuring dynamics such as resignations, help-wanted ads and the pace of hiring.

Although it lags the Labor Department’s other jobs figures by a month, Yellen tracks the report to get a better sense of labor-market tightness and worker confidence.

Job openings were broad-based in January, including increases in manufacturing, construction, business services, transportation and leisure and hospitality.

The number of people hired fell to 5.03 million from 5.4 million the prior month. The hiring rate dropped to 3.5% from 3.8%. The gauge calculates the number of hires during the month divided by the number who worked or received pay during that period.

One weak part of the report was that fewer Americans voluntarily left their current position. Some 2.8 million people quit their jobs in January, down from 3.09 million the prior month. The quits rate, which shows the willingness of workers to leave their jobs, eased to 2% from 2.2%. The rate was 2% when the recession started at the end of 2007.

Total dismissals, which exclude retirements and those who left their job voluntarily, decreased to 1.66 million from 1.67 million a month before.

About 1.4 unemployed people were vying for every opening, compared with about 1.8 when the 18-month recession began.

In the 12 months through January, the economy created a net 2.7 million jobs, representing 61.7 million hires and 59 million separations.

The JOLTS data follows the February payrolls report from the Labor Department, which showed job creation remains robust. The United States added 242,000 workers last month after 172,000 the prior month. The jobless rate held at an eight-year low of 4.9% as people entered the labor force and found work.

Fed policymakers, who kept interest rates unchanged March 16 after raising them in December for the first time in almost a decade, scaled back forecasts for how high borrowing costs will rise this year, citing the potential impact from weaker global growth and financial-market turmoil on the economy.

“The committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will continue to strengthen,” according to a statement from the Fed after the meeting.

Central bankers also said “a range of recent indicators, including strong job gains, points additional strengthening of the labor market.”