U.S. job openings unexpectedly rose in August, another sign the U.S. labor market remains strong despite higher interest rates — perhaps too strong for the inflation fighters at the Federal Reserve.
American employers posted 9.6 million job openings in August, up from 8.9 million in July and the first uptick in three months, the Labor Department said Tuesday. Economists had expected only another 8.9 million vacancies. 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, noted that 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 said, “but it hasn’t gone back on the boil.’’
The Federal Reserve wants to see the red-hot U.S. job market cool off, reducing pressure on businesses to raise pay, which can feed into higher prices. The central bank has raised its benchmark rate 11 times since March 2022 to combat inflation.
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.
So far, the economy has cooperated. Openings and quits are down from their 2022 peaks, while the unemployment rate (at 3.8% in August) remains near a half-century low. And inflation, which hit a four-decade high in mid-2022, has decelerated markedly 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 Fed chose not to raise rates at its last meeting Sept. 19-20. But Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said the unexpected increase in openings may keep the Fed “open to another rate hike this year.’’
Loretta Mester, president of the Federal Reserve Bank of Cleveland, late Monday said that rising gas prices could thwart further progress on inflation by pushing up related costs, such as shipping and airfares, and underscored that the Fed may still hike its key rate later this year. The rate is already at a 22-year high of about 5.4%.
“I suspect we may well need to raise the (Fed’s) rate once more this year and then hold it there for some time as we accumulate more information on economic developments,” Mester said.
_____
AP Economics Writer Christopher Rugaber contributed to this report.
