Number of job openings increasing rapidly

The Associated Press is reporting today that the number of job openings in the U.S. increased to 3.1 million in April, from 2.8 million in March.  The April level is the highest level since December 2008.  Most importantly, the increase of 300,000 job openings came entirely from the private sector.

Analysis: In order for new jobs to be created, for the unemployment rate to come down, and for the economy to expand, there first has to be a willingness by businesses to hire.  That’s exactly why this data is very important.  Employers have work to be done and they need people to do it.  Most job openings are ultimately filled.  So the number of job openings can be seen as a leading indicator of job growth, personal income growth, consumer spending growth and economic growth.

This data is also important because it indicates that the private sector is again looking to employ people.  Part of the criticism of the jobs growth of March and April was that the U.S. government created a disproportionate number of the jobs.  The job openings data suggest that the private sector is finally a participant in the market for labor, too.

Lastly, the data are also important because the number of private sector job openings jumped by 300,000 in one month.  That is a dramatic increase.  I am fond of saying that two data points do not make a trend, they make a line.  In other words, it is too early to say if May’s data for both job openings and employment growth will both be strong.  However, I will take two solid months over two negative months any day.

Importance grade: 9; the job opening data supports the thesis that I have been describing for many months now.  The U.S. economy is getting stronger and the economic recovery is almost complete.

Jason