Job openings unexpectedly increased in August while new hires and layoffs were little changed, according to new data from the Bureau of Labor Statistics (BLS).
The Job Openings and Labor Turnover Summary (JOLTS) showed that the number of employment vacancies rose by 330,000, to 8.04 million, the highest level since May. The July reading was revised higher to 7.711 million from 7.673 million.
Markets had projected 7.655 million job openings last month.
Most of the gains in job openings were centered in construction (138,000) and state and local government excluding education (78,000). The services sector registered a 93,000 drop in job vacancies.
Job quits—a gauge of the number of employees who voluntarily resigned from their positions—declined by 159,000, to 3.084 million, the lowest in four years. The July figure was adjusted lower to 3.243 million from 3.277 million.
Quits were broad-based, led by transportation, warehousing, and utilities (negative 45,000); arts, entertainment, and recreation (negative 18,000); and private educational services (negative 11,000).
Economists pay close attention to the job-quits data as it can indicate how confident workers are in the labor market.
JOLTS figures confirmed the latest trend of employers neither hiring nor firing, as the number of layoffs and new hires were little changed at 1.6 million and 5.3 million, respectively.
This was the first major labor report of the week, and market watchers will brace for several more, including the ADP National Employment Report (Oct. 2), Challenger job cuts (Oct. 3), weekly jobless claims (Oct. 3), and the September jobs report (Oct. 4).
Labor Market Conditions in Focus
As inflation decreases toward the Federal Reserve’s preferred target of 2 percent, it has faded into the background of monetary policymaking. Labor market conditions are now the chief concern for economists and Fed policymakers, says Mark Hamrick, the senior economic analyst at Bankrate.“Over the past several years, inflation metrics have been the star attraction in terms of incoming economic data. Topping the billing has been the Consumer Price Index, the main gauge of inflation at the retail level,” Hamrick said in a statement, as viewed via email by The Epoch Times. “But a rising unemployment rate, coupled with slower hiring, has helped to restore the relative interest in the monthly employment report.”
The unemployment rate has steadily risen since the start of the year, going from 3.7 percent in January to 4.3 percent in July. It dipped to 4.2 percent in August.
Moreover, economists at the Federal Reserve Bank of St. Louis say the unemployment rate has increased by an average of 5 basis points per month since April 2023.
Various experts have attributed the rise in unemployment to an injection of labor supply as more people return to the labor force and immigrants enter the workforce.
Still, the central bank has accepted that there is some slack in the national labor market, with conditions coming into “better balance.”
“If you’re out of work now, it’s going to be harder to find a job than it was two years ago, when the labor market was extremely tight, where you would have had multiple employers waiting for you outside the building to give you offers,” said Fed Chair Jerome Powell at a National Association of Business Economics event on Sept. 30. “Now it’s much more at a normal level, or even perhaps a little bit soft.”
While job seekers have increased, competition for vacant positions has also jumped.
According to Minneapolis Fed economists, each job faces 1.5 job seekers, which are “much worse odds for unemployed workers.”
Despite the easing trend over the last year, the Fed does not expect a crash in the jobs arena.
The updated September Summary of Economic Projections suggested that the central bank projects the median unemployment rate will be 4.4 percent by the year’s end and stay at that level in 2025.
According to Luke Tilley, the chief economist at Wilmington Trust, economists are also forecasting further normalization and unemployment peaking at 4.4 percent in the first and second quarters of next year. Monthly payroll growth is also seen returning to about 150,000 later next year.
“I think, encouragingly, the [Federal Open Market] Committee sees the labor market as having normalized and not getting too much worse,” Tilley said at an American Bankers Association event on Sept. 30.
Survey data suggest that consumers are more worried about the state of the labor market than in the last few years.
The Conference Board’s Consumer Confidence Index tumbled in September, suffering its sharpest decline since August 2021. This decline was driven largely by pessimism regarding employment.
“Consumers’ assessments of current business conditions turned negative while views of the current labor market situation softened further,” said Dana Peterson, the chief economist at The Conference Board. “Consumers were also more pessimistic about future labor market conditions and less positive about future business conditions and future income.”
Although unemployment levels and flows into unemployment are at historically low levels, St. Louis Fed economists say it is imperative to “keep a close eye on labor market dynamics” as the latest uptick “may signal more than a slight weakening” in the job market.
