The Bureau of Labor Statistics published its monthly estimate of jobs openings Tuesday, kicking-off a series of key employment reading that could provide further clarity on the strength of the labor market and its likely impact on near-term inflation pressures.
The Job Openings and Labor Turnover Survey, known as Jolts, showed that around 8.83 million positions went unfilled over the month of July, down from the 9.582 recorded in June and extending a run monthly declines that began in March. The July figure was the lowest since March of 2021 and down from the all-time high of 12.027 million recorded in March of last year.
The so-called quits rate, which tracks workers leaving their jobs voluntarily -- often for pay increases in another position -- slipped to 2.3% in July from 2.4% in June and 3% peak it hit at the start of last year.
"While most Americans who want a job have one, it is not as easy to find new work as a year ago. Hires and quits are back to their pre-pandemic levels, and job openings are falling rapidly," said Bill Adams, chief economist for Comerica Bank in Dallas.
"The Fed is concerned that rapid wage growth might stoke inflationary pressures in 2024, but wage growth is likely to slow in coming months with workers seeing fewer opportunities to raise wages by switching jobs," he added. "As wage growth cools, the Fed is likely to become more confident that inflation will keep moving towards their 2% target."
Labor market strength, and the wage gains that generally support it, have been a consistent concern for the Fed as the broader economy continues to defy recession forecasts.
The BLS reported last month that average hourly earnings rose 4.4% from a year earlier, and 0.3% from June, even as the overall tally of new jobs created slowed to 187,000 the lowest since December of 2020.
"Despite assertive interest rate increases by the Federal Reserve intended to counteract record inflation and cool the economy, the labor market remains robust," said Vanguard's Fiona Greig, Global Head of investor behavior and policy.
"Demand for workers is exceeding supply in almost every industry, and nominal annual wage growth is running above 4%," she added. "However, there are signals—including some from our own retirement plan data—that suggest hiring is slowing, which could portend softening in the labor market down the road."
We are not out of the woods yet, but, thus far, a decline in openings (and quits) without a rise in unemployment is a good outcome from the fastest Fed tightening cycle in modern U.S. history. pic.twitter.com/17esYBrgdV
— Steven Rattner (@SteveRattner) August 29, 2023
Jobs and wages may prove crucial pieces to the Fed's inflation puzzle, particularly in the wake of a pay deal agreed between package delivery giant United Parcel Service UPS and its unionized workers and the threat of a strike by the United Auto Workers Union following a Friday vote by its 'Big Three' membership.
The BLS will publish its August payroll report on Friday, with economists are looking for a net gain of 186,000 new jobs over the month of August, with average hourly earnings rising 0.3% on the month and the headline unemployment rate holding at a five-decade low of 3.5%.
Prior to Friday's jobs data, payroll processing group ADP will publish its National Employment report at 8:15 a.m. EDT on Wednesday, with the Labor Department following-up with weekly jobless claims data at 8:30 a.m. on Thursday.
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