In a disconcerting development for a desperate Fed, Wednesday’s update on job openings across the US economy showed vacancies unexpectedly rose.

There were 10.103 million openings on the last business day of April, the JOLTS figures showed. That was 358,000 higher than the prior month’s (upwardly revised) 9.745 million. Hires were essentially unchanged, leaving the gap wider on the month.

It was a bitter pill for the soft landing crowd. Openings were expected to post a fourth straight monthly decline. Consensus wanted 9.35 million from the headline, which would’ve been the lowest in two years. Instead, openings are back above 10 million. The headline exceeded every estimate.

Headed into the data, openings had receded by 1.644 million in 2023. Between the upward revision to March’s headline and April’s upside surprise, that figure is now just 1.131 million.

Openings in leisure and hospitality (and we’re really just talking about food service and accommodation) fell again, and were the lowest in two years. That, at least, is progress.

As discussed in this week’s data preview, the soft landing crowd had one thing going for it this year: Job openings had declined dramatically with no attendant increase in the unemployment rate. That’s a first in the modern history of the US economy.

While it’s still true even after Wednesday’s JOLTS surprise, the validity of the soft landing case rests almost entirely on the idea that millions of job openings can be rendered superfluous, thereby reducing labor market friction, relieving upward pressure on wage growth and, eventually, cooling inflation. Upside JOLTS surprises make that outcome incrementally less likely.

Although you could argue the JOLTS figures were inconsistent with the narrowing labor market differential in the Conference Board Survey, that spread actually moves more closely with the quit rate in the JOLTS release, which did fall. Quits are still elevated, but the 2.4% rate was the lowest since February of 2021 and the number of quits, at 3.793 million, was the fewest since March of that year.

I don’t think that “offsets” the signal from the headline openings print, but it helps. It’s a silver lining that points to less in the way of churn, and churn is a proxy for job “switcher” wage growth. Also notable (and arguing against labor market “slackening”), layoffs and discharges fell.

Extrapolating using last month’s employment figures, the ratio of openings to unemployed Americans rose after hitting a 17-month low with March’s JOLTS release.

The bottom line on Wednesday was simple enough: The big headline openings beat underscored aggressive market pricing for June FOMC rate hike odds. In recent remarks, Jerome Powell plainly suggested he’s more inclined to pause, but a cacophony of hawkish banter from other officials (all hawks, admittedly), robust consumer spending data for April, the hotter-than-expected core PCE print for last month and, now, a big upside JOLTS surprise, all argue for more tightening.

Of course, it all hangs on May’s jobs report and CPI figures. Later Wednesday, Patrick Harker and Philip Jefferson made the case for a pause at the next policy gathering.