Update at 12:00 pm EDT
The U.S. job market continued to strengthen in April, data from the Bureau of Labor Statistics indicated Wednesday, building an even stronger case for the Federal Reserve to extend its rate-hiking cycle into the summer.
The Job Openings and Labor Turnover Survey, known as Jolts, showed that 10.103 million positions went unfilled in April, a more than 5% uptick from the 9.59 million tally in March.
The figure was down 16% from the record 12.027 million notched in March of last year.
Nonetheless, the increase from March levels was a surprise after accelerated layoffs in the tech and banking sectors. And this in turn suggests the labor market will carry its resilience into the summer months, potentially forcing employers to increase wages and further complicating the Federal Reserve's effort to bring inflation back closer to its 2% target.
Friday's nonfarm-payroll report is expected to show slowing gains, however, with 180,000 new positions created and growth in monthly average hourly earnings easing to 0.4%.
"Not only did today’s job openings number came in much stronger than expected at 10.1 million, last month’s number was revised higher." said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office. "Friday’s jobs report may tell a different tale, but this is just one more sign the labor market is still hot and raises the pressure on the Fed to raise interest rates further this year."
U.S. stocks remained down on the session, with the S&P 500 marked 35 points, or 0.82%, lower and the Dow Jones Industrial Average down 2659 points, or 0.82%, on the final trading day of the month.
More Confidence That Fed Will Lift Rates
Benchmark 2-year Treasury note yields bumped higher in the wake of the Jolts data, with the security pegged at 4.430%. The 2-year had retreated following the progress of the debt-ceiling agreement through the Republican-controlled House Rules Committee late Tuesday and after a weaker-than-expected reading for economic activity around the Midwest.
Bets on a June rate hike, meanwhile, jumped to around 72.2%, according to CME Group's FedWatch, following both the Jolts jobs data and comments from Cleveland Federal Reserve President Loretta Mester, who told the Financial Times that she saw "no compelling reason to pause" the Fed's current rate-hike cycle.
"I would see more of a compelling case for bringing the rates up and then holding for a while until you get less uncertain about where the economy is going," Mester said.
The odds of a follow-on increase in July, which would take the federal funds rate to between 5.25% and 5.5%, are now pegged at 26%, up from 0% just a few weeks ago.
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