WASHINGTON- US job openings increased in July and data for the prior month was revised sharply higher, pointing to persistently strong demand for labor that is giving the Federal Reserve cover to maintain its aggressive interest rate increases.
The Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS report, on Tuesday, showed there were two jobs for every unemployed person last month, pointing to extremely tight labor market conditions. It suggested that fears the economy was in recession after two straight quarterly declines in gross domestic product were greatly exaggerated.
“The Fed has front-loaded its monetary restraint this year to an unprecedented degree and the economy isn’t giving them any reason to hold back,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “The labor market is strong as a bull, two jobs out there for the unemployed to choose from.”
Job openings, a measure of labor demand, increased 199,000 to 11.239 million on the last day of July. Data for June was revised higher to show 11.040 million job openings instead of the previously reported 10.698 million. Economists polled by Reuters had forecast 10.450 million vacancies.
There were an additional 81,000 job openings in the transportation, warehousing and utilities industries last month. Job openings increased by 53,000 in the arts, entertainment and recreation sector, while the federal government had 47,000 more openings and state and local government education had an additional 42,000 unfilled jobs, ahead of the new school year.
But job openings decreased by 47,000 in the durable goods manufacturing industry. There were more job openings in the West, while the South and Midwest saw small gains.
Vacancies fell in the Northeast.
The Fed is trying to cool demand for labor and the overall economy to bring inflation down to its 2 percent target.
Fed Chair Jerome Powell warned last week that Americans were headed for a painful period of slow economic growth and possibly rising unemployment as the US central bank aggressively raises interest rates in a bid to bring supply and demand back into balance.
The Fed has raised its policy rate by 225 basis points since March.
The job openings rate climbed to 6.9 percent last month from 6.8 percent in June. Hiring slipped to 6.382 million from 6.456 million in June, keeping the hiring rate unchanged at 4.2 percent. The jobs-workers gap rose to 3.4 percent of the labor force from 3.1 percent in June.
Layoffs dropped to 1.398 million from 1.400 million in June. There were decreases in leisure and hospitality, professional and business services as well as finance activities.
These offset a surge in trade, transportation and utilities industries.
About 4.179 million people quit their jobs, down from 4.253 million in June. The quits rate, viewed by policymakers and economists as a measure of job market confidence, dipped to a 14-month low of 2.7 percent from 2.8 percent in June.
Still, confidence in the labor market remains high. A separate report from the Conference Board on Tuesday showed its so-called labor market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, edged down to 36.6 this month from a reading of 36.8 in July.
This measure correlates to the unemployment rate from the Labor Department. – Reiuters
