The continuous interest rate increases being imposed by the Federal Reserve – it has raised rates 11 times since March 2022 – might not be having the effect the Fed hoped on the job market.
U.S. job openings rose in August, another sign the U.S. labor market remains strong despite the higher interest rates.
American employers posted 9.6 million job openings in August, an increase from the 8.9 million posted in July, according to statistics released Tuesday by the Labor Department. It’s the first increase in three months. According to an Associated Press report, that’s about 700,000 more openings than economists had expected. The number of layoffs and of people quitting their jobs — a sign of confidence in their prospects — were both essentially unchanged from July.
Nick Bunker, head of economic research at the Indeed Hiring Lab, said most of the August increase in openings came from just one industry: professional and business services. “”Yes, the job market is still retaining a lot of heat,” he told the AP, “but it hasn’t gone back on the boil.”
Fed Chair Jerome Powell has expressed hope that hiring would moderate in the least painful way possible — with fewer vacancies and less job-hopping rather than through layoffs, the AP report said.
Openings and quits are down from their 2022 peaks, while the unemployment rate (at 3.8% in August) is still close to a half-century low. And inflation, which hit a four-decade high in mid-2022, has slowed down over the past year, raising hopes that the Fed can achieve a so-called soft landing — raising rates just enough to rein in rising prices without tipping the economy into a recession, the AP reported.
The Fed chose not to raise rates at its last meeting Sept. 19-20. But Rubeela Farooqi, chief U.S. economist at High Frequency Economics, told the AP the unexpected increase in openings may keep the Fed “open to another rate hike this year.”
