Written by Lucia Mutikani
WASHINGTON (Reuters) – U.S. job openings unexpectedly increased in August after consecutive monthly declines, but hiring was weak and consistent with a labor market slowdown that keeps the Federal Reserve on track to cut interest rates again in November. .
The Labor Department’s Job Opportunities and Labor Turnover Survey, or JOLTS report, on Tuesday also showed a decline in layoffs. There were 1.13 job openings for every unemployed person in August and resignations were the lowest in four years.
Although Federal Reserve Chairman Jerome Powell on Monday pushed back against investor expectations for another half-percentage-point rate cut, he described labor market conditions as having clearly cooled over the past year, noting that “workers now view jobs as… “Somewhat less available than it used to be.” In 2019.”
“Employers will likely see lower interest rates stimulating the economy and may want to increase headcount after lackluster hiring over the past three months,” said Robert Frick, corporate economist at Marine Federal Credit Union. “We are still months away from a potentially strong jobs market, and workers understand that and are continuing to leave their jobs at a slower pace.”
Job openings, a measure of labor demand, rebounded by 329,000 to 8,040 million by the last day of August, the Labor Department’s Bureau of Labor Statistics said. July data was revised upward to show 7.711 million job vacancies instead of the previously announced 7.673 million.
Economists polled by Reuters had expected 7.660 million job opportunities. The construction sector led the increase in job vacancies, with the number of job opportunities reaching 138,000 jobs. There were 78,000 vacancies in state and local governments, excluding education. But job opportunities in the “other services” category decreased by 93,000 jobs.
The job opening rate rose to 4.8% from 4.6% in July.
Hirings fell by 99,000 to 5.317 million, dragged down by declines in retail, transportation, warehousing and utilities as well as manufacturing, health care and social assistance. Appointments at hotels, restaurants and bars also declined.
The employment rate fell to 3.3% from 3.4% in July.
Layoffs fell by 105,000 to 1.608 million. There were decreases in layoffs in the retail, health care and social assistance sectors as well as in hotels, restaurants and bars. However, layoffs in the professional and business services sector increased.
Resignations fell by 159,000 to 3.084 million, the lowest level since August 2020. That pushed resignation rates to a four-year low of 1.9% from 2.0% in July, which should help curb wage inflation.
The slowdown in the labor market is due to lower employment rates following a 525 basis point interest rate hike by the US central bank in 2022 and 2023 to combat inflation. Price pressures have largely eased, allowing the Fed to shift focus to the labor market.
The central bank last month cut its benchmark interest rate by an unusually 50 basis points to a range of 4.75%-5.00%, the first cut in borrowing costs since 2020, in a sign of growing concerns about the health of the labor market.
The Fed is expected to cut interest rates again in November and December. The focus now turns to the September employment report, which is scheduled to be released on Friday.
Nonfarm payrolls likely rose by 140,000 jobs last month after rising by 142,000 jobs in August. That would be well below the average monthly gain of 202,000 jobs over the past 12 months.
The unemployment rate is expected to remain unchanged at 4.2%. It rose from 3.4% in April 2023, as increased immigration boosted labor supply.
“The Fed is likely to cut by a quarter of a percentage point at each of the remaining meetings this year, unless we see unexpected deteriorating conditions,” said Jeffrey Roach, chief economist at LPL Financial (NASDAQ).
Stocks on Wall Street fell amid reports that Iran is preparing to launch an imminent ballistic missile attack against Israel. The dollar rose against a basket of currencies as investors searched for a safe haven from the escalating tensions in the Middle East. US Treasury yields fell due to safe haven flows.
Stable manufacturing
The hiring slowdown and easing inflation were confirmed by a survey conducted by the Institute for Supply Management (ISM), which showed factory hiring slowed in September. The ISM manufacturing employment index fell to 43.9 from 46.0 in August. A measure of prices paid by manufacturers fell to 48.3, the lowest level since December 2023, from 54.0 in August.
A strike by members of the International Longshoremen’s Association, which began Tuesday, could temporarily disrupt supply chains and increase input prices. The ISM measure of supplier deliveries rose to 52.2 from 50.5 the previous month. A reading above 50 indicates slowing deliveries.
Manufacturing generally remained stable at weaker levels last month, despite an improvement in new orders. The ISM Manufacturing PMI was unchanged at 47.2 last month. A PMI reading below 50 indicates a contraction in the manufacturing sector, which represents 10.3% of the economy.
It was the sixth month in a row that the PMI remained below the 50 threshold, but above the 42.5 level which the ISM said over time generally indicates an expansion in the overall economy.
However, the survey magnified the weakness in manufacturing, as so-called hard data such as factory production and durable goods orders showed the sector moving largely sideways. GDP data last week showed manufacturing output rose at an annual rate of 2.6% in the second quarter, an acceleration from the 0.2% pace recorded in the January-March quarter.