The number of jobs available in the US plummeted in August compared to July as companies are less desperate to hire workers, a trend that could cool chronically high inflation.
There were 10.1 million jobs posted on the last day of August, the Bureau of Labor Statistics said Tuesday, a whopping 10% less than the 11.2 million openings in July. In March, job openings hit a record high of nearly 11.9 million.
Layoffs increased in August but remained at a historically low level. And a few more people quit their jobs.
The Federal Reserve will welcome the sharp drop in job openings as it believes that increasing unemployment in the nation could cool inflation. The Fed forecasts that the unemployment rate will rise to 4.4% next year from 3.7% now, a figure that implies an additional 1.2 million people will lose their jobs.
Fed officials have cited the high level of vacancies as a sign of strong job demand that has forced employers to steadily raise wages to attract and retain workers.
Friday jobs report
Analysts, however, attribute the lower numbers to a general state of unpredictability.
“To be clear, these changes are all quite small and show an overall volatility of the series,” Elise Gould, a senior economist at the left-leaning Economic Policy Institute, wrote in response to the Job Vacancies and Turnover Survey report ( JOLTS, for its acronym in English) of August.
He added: “The drop in job openings is the big story today, but remember we already saw the data on net job growth in August and it was strong, with 315,000 jobs added and an increase in labor force participation.” .
Tuesday’s figures come in the same week that a key report on employment and the unemployment rate is due out on Friday. Economists forecast it will show employers added 250,000 jobs in September and the jobless rate held at 3.7% for the second month in a row.
Smaller wage increases, if sustained, should ease inflationary pressures. In its effort to combat the worst inflation in 40 years, the central bank raised its key short-term interest rate to a range of 3% to 3.25%, well above near zero in March.
Chairman Jerome Powell and other Fed officials hope his interest rate hikes, the fastest in about four decades, will cause employers to scale back efforts to hire more people. Fewer job openings, in turn, could reduce pressure on companies to raise wages to attract and keep workers.