A sign of strength in the labor market: Job openings increased in August
The health of the job market has become the top concern for the Federal Reserve
(CNN) — The number of available jobs in the US grew in August, signaling an undercurrent of strength in the labor market at a time when its vitals are being carefully monitored by the Federal Reserve.
There were an estimated 8.04 million job openings in August, an increase from an upwardly revised 7.71 million in July, according to new data released Wednesday by the Bureau of Labor Statistics.
The latest tally equates to 1.1 available jobs for every person looking for one, BLS data shows.
Economists were expecting the number of available jobs to land at 7.682 million, a slight increase from July’s initial total, according to FactSet consensus estimates.
The latest Job Openings and Labor Turnover Survey report kicks off a week chock-full of critical economic data for the US labor market, culminating with the Friday jobs report. The health of the job market has leap-frogged inflation to become the top concern for the Fed, which cut its benchmark interest rate last month for the first time in four years.
The latest JOLTS report — which also tracks hiring, quitting, layoff and other turnover activity — provides an indication that there is some underlying stability in the labor market despite slowing job growth overall.
The industries seeing the biggest jump in openings were construction; transportation, warehousing and utilities; and state and local government (excluding education). Alternatively, available jobs shrank across many service sectors, including finance, and arts and entertainment.
“The increase in job openings is encouraging, but we’ve got to string together a few months of improving job openings,” Ryan Sweet, chief US economist at Oxford Economics, told CNN in an interview. “The key for the labor market boils down to the hires rate and the layoffs rate.”
The number of layoffs dropped in August, showing that worrisome job-cutting activity doesn’t appear to be escalating. However, hiring activity continued to languish.
“The layoffs rate is still very low, but that can turn on a dime, and I think that’s what’s worrying the Fed,” Sweet said. “I’d probably describe the labor market as ‘so-so.’ It’s just not creating enough jobs to keep up with the growth in the labor force.”
Hiring has slowed for several reasons, including a compression of corporate profit margins, uncertainty around the elections, as well as over-hiring in industries such as health care and leisure and hospitality, Sweet said.
Also, monetary policy acts with a lag, and it may take some time for the lower interest rates to start working their way through the economy.
Tuesday’s JOLTS report also showed that workers appear to be taking a wait-and-see approach as well.
As the labor market slows and opportunities wane, more workers are staying put: The number of people voluntarily quitting their jobs fell to 3.084 million, the lowest level since September 2020.
Outside of the pandemic, the 1.9% quits rate, which measures voluntary separations as a percentage of total employment, is the lowest seen since 2015.
“We’re still months away from a potential robust jobs market, and workers understand this and continue to quit their jobs at a slower pace,” Robert Frick, corporate economist at Navy Federal Credit Union, wrote in commentary issued Tuesday.
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