The US Labor Market Thrives As Job Openings Rise High In July Amidst Interest Rate Hikes

The number of job openings drastically magnified in July than seen in previous months, suggesting that there is still an extremely high demand for labor even with the recent interest rate hikes. This gives the Federal Reserve more freedom to keep increasing interest rates.

According to the Labor Department's Job Openings and Labor Turnover Survey (JOLTS) report, there are almost two job openings for every unemployed person in July. This suggests extremely tight conditions in the labor market. It appears that the experts’ fears about a recession were somewhat overrated.

The number of job openings is considered to be a measure of labor demand. This number increased by 199,000 to reach a total of 11.239 million on the final day of July. Previously, only 10.698 million job openings were reported in the country. After the survey in July, this number reached 11.040 million.

81,000 job openings were available in the transportation, warehousing, and utility sectors in July, while there was an increase of 53,000 job openings in the arts, entertainment, and recreation industries. The federal government had 47,000 job openings going on for them while state and local government education had 42,000 vacancies.

The increase in job openings was not similar to the durable goods manufacturing industry, which showed a decrease of 47,000 openings. Speaking geographically, more job openings were seen in the West. The South and Midwest had dwindling numbers of open positions while the Northeast experienced a decline in vacancy numbers.

The target of the Fed is to lower the labor demand and bring inflation to a low of 2%. Since March 2022, the Fed has hiked policy rates by 225 basis points. They also warned Americans of a period of slow economic growth and the possibility of rising unemployment rates.

The rate of job openings had increased up to 6.9% in July from June’s 6.8%. However, hiring lowered to 6.382 million from 6.456 million. The hiring rate remains unchanged at 4.2%. The jobs-workers is at 3.4%.

In June there were around 1.400 million layoffs while the number dropped to 1.398 million in July. The sectors exhibiting a decrease were hospitality, professional and business services, and finance. The number of employees quitting their jobs was lowered from 4.253 million to 4.179 million in July. The quits rate dropped to a low seen in 14 months to 2.7% from 2.8%.

A report done by the Conference Board stated that the labor market differential dropped to 36.6 in July from 36.8 in June. We can expect markets to misinterpret the findings of the Conference Board report and believe that the FED will hike rates further. According to industry experts, inflation may come down due to other reasons than the interest rate hikes by the Fed.

As found by the Conference Board, the overall consumer confidence index is at 103.2 in July. This number was 95.3 in July. Although inflation rates are soaring, the number of consumers planning to go on vacation is higher than what was seen for 8 months.

The number of consumers who are planning to buy motor vehicles and household appliances in the coming few months has also increased. The gross domestic product, which contracted at a rate of 1.6% from January through March, fell at an annual rate of 0.6%. Buyers are still interested in procuring homes despite the aggressive interest rate hikes by the Fed. The pace of monthly house price inflation has also reduced.

The S&P CoreLogic Case-Shiller national home price index observed an increase of 0.3% in June. This saw an annual increase of 18.0%. The Federal Housing Finance Agency showed price gains of 0.1%, after an increase of 1.3% in May. Although there is a tight supply, the house price growth is expected to rise.

By Resume Mansion


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