U.S. job openings unexpectedly rose in August, another sign that the U.S. labor market remains strong despite rising interest rates — and that may be too strong for the Federal Reserve’s inflation warriors.
U.S. employers posted 9.6 million job openings in August, the Labor Department said on Tuesday, up from 8.9 million in July, the first increase in three months. Economists had expected only 8.9 million new jobs. The number of layoffs and resignations – a sign of confidence in its prospects – was largely unchanged from July.
“Job openings don’t tell the story the Fed wants to hear,” Nancy Vanden Houten, chief U.S. economist at Oxford Economics, said in a note.
Nick Bunker, director of economic research at Indeed Hiring Labs, noted that most of the job openings added in August came from one industry: professional and business services. “Yes, the job market remains very hot,” he said, “but it’s not back to a boil.”
The Fed hopes to see the red-hot U.S. job market cool down, thereby easing pressure on companies to raise wages, which could push up prices. Since March 2022, the central bank has raised its benchmark interest rate 11 times to combat inflation.
Fed Chairman Jerome Powell said he hopes hiring can be eased in the least painful way possible – reducing job openings and job-hopping, rather than through layoffs.
The strong employment data caused an uproar in the U.S. market, with many investors betting that the possibility of more aggressive action by the Federal Reserve increased. The Dow Jones dropped 100 points in a matter of seconds.
“Today’s higher-than-expected job openings number is not good news for stocks or bonds,” Gina Bolvin, president of Bolvin Wealth Management Group, said in an email. “The market wants to see this number. fell, but now the likelihood of a rate hike has increased.”
Job openings and separations are down from their peak in 2022, while the unemployment rate (3.8% in August) remains near its lowest level in half a century. Inflation, which hit a four-year high in mid-2022, has slowed significantly over the past year, raising hopes that the Fed can achieve a so-called soft landing — a rate hike that would be enough to rein in rising prices without causing a major disruption to the economy. Influence. into recession.
The Fed chose not to raise interest rates at its last meeting on September 19-20. But Rubila Farooqi, chief U.S. economist at High Frequency Economics, said the unexpected increase in job openings could leave the Fed “open to another rate hike this year.”
Cleveland Federal Reserve President Loretta Mester said late Monday that rising natural gas prices could hinder further progress in inflation by pushing up related costs such as transportation and air tickets, stressing that the Fed may still hold off on further inflation later this year. Interest rate hike later. Year. The rate has reached a 22-year high at around 5.4%.
“I suspect we’ll probably need to raise (Federal Reserve) rates again this year and then keep them there for a while as we accumulate more information about how the economy is developing,” Mester said.
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