.Job openings in the US jumped unexpectedly in August, causing traders to worry the job market may not be cooling fast enough to please the Federal Reserve, as the regulator is considering implementing more rate hikes to combat price growth.
On Tuesday, the latest Job Opening and Labor Turnover Survey (JOLTS) report was released, which showed that there were 9.6 million jobs open at the end of August, up from 8.92 million in July.
The report also showed there was a fall in the quits rate, which economists watch, as an elevated quits rate is seen as a sign of high confidence by workers they will be able to find a new job. The August quits rate remained unchanged at 2.3%, which was the lowest it had been since 2021. The report also showed there were 5.9 million hires over the month, which was a slight increase from the 5.8 million seen in the previous month.
Fed Chair Jerome Powell will likely not be pleased by the news, as he has noted repeatedly that the central bank is looking to achieve a “better balance” between the supply of labor and the demand.
In a speech at the Jackson Hole Economic Symposium in August, Powell said, “We expect this labor market rebalancing to continue. Evidence that the tightness in the labor market is no longer easing could also call for a monetary policy response.”
As the news of the report spread, stocks fell off fears of further monetary tightening. The tech-heavy Nasdaq was the hardest hit, falling 1.4%. The Dow Jones Industrial Average was down 0.8%, or over 250 points, as the S&P 500 fell almost 1.0%.
In a research note, Oxford Economics lead US economist Nancy Vanden Houten wrote, “The Fed continues to monitor [JOLTS] as a gauge the of labor market conditions and on the surface, it’s telling us that labor market conditions remain tight. The Fed won’t make policy decisions based on one JOLTS report, but it doesn’t keep the risks tilted toward another rate hike.”
Traders will get another labor market report on Friday, when the September jobs report is issued. It is expected to show 170,000 jobs were added to the economy in September, as the unemployment rate slid down slightly to 3.7%.
