The number of job vacancies in the United States decreased in August by the greatest in over 2-1/2 years, indicating that the labour market was beginning to cool as the economy struggled with rising interest rates intended to stifle demand and control inflation.
Vacancies remained over 10 million for the 14th consecutive month, even though the Labor Department’s Job Opportunities and Labor Turnover Survey, or JOLTS, report on Tuesday showed a fifth consecutive month of declines in job openings this year.
This carefully monitored indicator of supply-demand equilibrium in the labour market showed that there were 1.7 job vacancies for every unemployed individual in August, dropping from two in July, although it remained higher than its historical average.
The labour market is still tight, as evidenced by the low level of layoffs, and this will likely maintain the Federal Reserve on its assertive course of tightening monetary policy.
According to Sophia Koropeckyj, a veteran economist at Pennsylvania-based Moody’s Analytics, the labour market is still strong even though increased interest rates, inflation, and weakened consumer and business confidence are starting to slow down activity. The Fed is anticipated to not be prepared to pause just yet.
On the final day of August, there were 10.1 million job opportunities, which was the lowest number since mid-2021. The fall in August was the biggest since April 2020, once the economy was in shambles due to the COVID-19 pandemic’s initial wave. Surveyed economists predicted 10.775 million job openings.
Social welfare and health-care assistance saw the largest reduction in job postings, down 236,000.
In contrast to the 143,000 fewer vacancies in the retail trade sector, there were 183,000 lesser available jobs in other services. Additionally, there were fewer job vacancies recorded in the professional, leisure, and hospitality sectors as well as in the financial activities sector.
Although employment in the healthcare & leisure sectors is still below pre-pandemic levels, job openings in these sectors have decreased, prompting some economists to hypothesize that factors other than increased borrowing costs were responsible for the slowdown in demand for workers.
Veronica Clark, an economics expert at Citigroup in New York, claimed the decline in opportunities may be due to healthcare providers getting more acclimated to functioning amid labour shortages and forgoing hiring.
All four regions experienced declines, with the Midwest experiencing the largest reduction. From 6.8% in July, the rate of job vacancies dropped to 6.2% today. The hiring rate climbed slightly, remaining at 4.1%.
Wall Street stocks were trading higher. About a currency basket, the dollar decreased. Treasury prices increased.
To reduce inflation to its target of 2%, the Fed is working to slow down the demand for labour as well as the broader economy.
Since March, the U.S. central bank has increased its policy rate from close to zero to the present level of 3.00% to 3.25%, and this month it gave a hint that additional significant hikes would be coming this year.
The number of available jobs decreased, and the unemployment rate rose from 3.5% in July to 3.7% as a result.
The employment-worker gap decreased from 3.4% in July to 2.5% of the labour force, or 4.0 million people, which may have slowed wage increases. From 3.6% of the labour force in March, it has fallen.
Conrad DeQuadros, the veteran economic advisor at the Brean Capital in New York, said the Fed will welcome this apparent drop in the excess demand for labour in the hopes that it will lessen wage pressures. But in August, the employment-to-job vacancies ratio was roughly where it was in the final quarter of 2021, which was a record-high period.
From 4.1 million in July, the number of persons departing their employment voluntarily increased to 4.2 million.
There were 119,000 more resignations in the hospitality and food services sector, whereas there were 94,000 fewer in the professional and business services sector.