Job Openings Hover Near Record Highs

Strong demand for workers is a key factor pushing up wages and inflation in the current U.S. labor market, despite economic uncertainty stemming from Russia’s invasion of Ukraine.

The Labor Department is set to release estimates on Tuesday at 10 a.m. of February job openings and the number of people who left their positions voluntarily. Economists surveyed by The Wall Street Journal estimate the figures inched lower last month. The government data lag behind private-sector data by about a month.

Job openings soared in 2021 to a record 11.4 million in December, according to the Labor Department. Meanwhile, the number of times workers quit their jobs also soared, reaching a peak toward the end of last year.

The gap between the level of openings and the number of people who are unemployed and actively seeking work has persisted for several months.

“Demand for labor is still incredibly high, but there’s also progress happening, and we are on track to getting back to a pre-pandemic labor market based on many metrics by this year, potentially,” said Nick Bunker, an economist at Indeed.

Mr. Bunker said that the tightness in the labor market has already reduced in some sectors of the economy such as leisure and hospitality. He said this can be seen through quits trending down and wage growth cooling.

The average hourly pay for private-sector workers rose by just a penny in February, after growing by at least a dime a month over the last several months, and quits have been declining since peaking in November.

Hiring might get easier this year as more people seek jobs, said Joshua Shapiro, chief U.S. economist at forecasting firm Maria Fiorini Ramirez Inc.

“A lot of government support that was helping people out is over—the government cheese isn’t coming anymore. They’ll need to work in order to support themselves,” Mr. Shapiro said. “And kids are back in school, so parents don’t have to worry about what to do with their kids.”

The U.S. labor market still faces the challenge of elevated inflation, which rose 7.9% year-over-year in February, the highest in 40 years.

“Everybody’s reading about a high rate of inflation. They are seeing it at the gas pump, they are seeing it in the grocery stores, so that can cause employee demand for higher wage increases to kick up,” said Patricia Buckley, managing director for economics at professional-services company Deloitte.

While consumers’ expectations for inflation can affect wages, higher inflation can also lower demand for certain goods and services—potentially also reducing some employers’ demand for workers, Ms. Buckley said.

Because of higher costs, Michelle Pusateri, owner of Nana Joes Granola, a granola company in San Francisco, said she has tried to find ways to meet consumer demand without having to add more workers as she looks to minimize costs.

“We have been looking at increasing efficiencies through automation, which would mean not having to hire more people,” Ms. Pusateri said, citing the packaging process as one area of focus.

Write to Bryan Mena at [email protected]