The U.S. job market remained stronger than expected in August according to the latest Job Openings and Labor Turnover Survey (JOLTS) released by the Bureau of Labor Statistics. Job openings unexpectedly increased after three consecutive months of falling numbers, particularly in white-collar sectors, including professional and business services, finance and insurance, and education. There were 9.6 million job openings in the month, up from a revised total of 8.9 million in July, according to seasonally adjusted figures.
In addition, the so-called “quits rate”, which measures voluntary job leavers as a share of total employment, held steady at 2.3%, matching the lowest since 2020, indicating that Americans remain confident they will easily find a new job if needed. The ratio of openings to unemployed people was consistent at 1.5 to 1.
Bad News For the Fed
While a strong job market may be good news for American workers, the Federal Reserve Bank may have a different opinion. The tight labor economy has been a pain point for the Fed in its aggressive campaign to curb inflation since more job openings are often synonymous with higher wages as employers compete to attract and retain job seekers. As a result, prices tend to remain higher than comfortable and constitute a significant obstacle for the Fed to reach its targeted 2% inflation rate despite successive interest rate increases over the past 18 months.
“With job openings remaining well above levels recorded prior to the pandemic and moving in the wrong direction in August, these data support a higher for longer message on rates from the Fed and will likely keep the FOMC open to another rate hike this year,” noted Rubeela Farooqi, chief US economist at High Frequency Economics.
Looking at the Big Picture
Others adopt a less pessimistic approach. “The labor market is tight, but it’s easing, and gracefully so,” said Mark Zandi, the chief economist at Moody’s Analytics. He added that slowdowns in monthly job growth, wage growth, hours worked, and businesses using fewer temporary workers all pointed to a cooling of the labor market.
The Fed will undoubtedly continue to keep a close eye on other indicators before its next meeting at the end of the month, including the upcoming monthly job report scheduled to be published on Friday.
We’ll keep you updated on further developments. In the meantime, if you’d like more information about buying/selling or refinancing in today’s market, give us a call or drop us an email.
