Employment opportunities expansion in August, hitting most significant level since May

 

M.Aminur Rahman.

The surge in job openings in the United States during August has raised questions about whether the labor market is cooling rapidly enough to appease the Federal Reserve, which is contemplating further interest rate hikes to combat inflation.

According to the latest Job Openings and Labor Turnover Survey (JOLTS) report released on Tuesday, there were 9.6 million job openings at the end of August, an increase from the 8.92 million openings in July. Economists surveyed by Bloomberg had anticipated 8.82 million job openings for July.

The report also indicated a decline in the quit rate, a closely monitored metric by economists, as higher quit rates are seen as a sign of worker confidence. In August, the quit rate remained steady at 2.3%, the lowest since January 2021. The JOLTS report revealed that 5.9 million hires were made during the month, a slight uptick from the 5.8 million hires in the previous month.

This development may not be well-received by the Federal Reserve, as Chairman Jerome Powell has repeatedly emphasized the central bank's pursuit of a "better balance" between labor supply and demand.

"We anticipate this labor market rebalancing to continue," Powell stated in a speech at the Jackson Hole Economic Symposium in August. "Evidence that labor market tightness is not easing could necessitate a monetary policy response."

Stock markets reacted negatively to this news, with concerns about further tightening of monetary policy lingering in investors' minds. The tech-heavy Nasdaq Composite (^IXIC) experienced the most significant decline during the early morning session, dropping 1.4%. The Dow Jones Industrial Average (^DJI) fell by 0.8%, or over 250 points, while the S&P 500 (^GSPC) dipped nearly 1.0%.

"The Fed continues to view [JOLTS] as a gauge of labor market conditions and, by all accounts, it tells us that labor market conditions remain tight," commented Nancy Vanden Houten, the lead US economist at Oxford Economics, in a research note. "The Fed won't base policy decisions on one JOLTS report, but it doesn't rule out the possibility of another rate hike."

Another assessment of the labor market is expected on Friday when the September jobs report is released. Speculations suggest it may show the addition of 170,000 jobs to the economy last month, with the unemployment rate expected to slightly decline to 3.7%.

 source-Josh Schafer Report from Yahoo Finance.