U.S. job openings saw an unexpected rise in August, following two consecutive months of decline, but hiring remained weak, indicating a slowing labor market that could prompt the Federal Reserve to cut interest rates again in November. The Labor Department's Job Openings and Labor Turnover Survey (JOLTS) report, released on Tuesday, also noted a decrease in layoffs. In August, there were 1.13 job openings for every unemployed person, up from 1.08 in July. Resignations hit a four-year low, suggesting Americans are becoming less confident in the job market.
Despite Fed Chair Jerome Powell's resistance to investor expectations of another half-percentage-point rate cut, he acknowledged that labor market conditions have cooled over the past year. Jonathan Millar, a senior economist at Barclays, noted that the JOLTS data suggests labor demand is stabilizing, limiting further increases in the unemployment rate. Job openings, a measure of labor demand, increased by 329,000 to 8.040 million by the end of August, according to the Bureau of Labor Statistics. The rise was led by the construction industry, with 138,000 job openings.
Hires decreased by 99,000 to 5.317 million, driven by declines in retail trade, transportation, warehousing, utilities, manufacturing, healthcare, and social assistance. Layoffs also declined by 105,000 to 1.608 million, with decreases in retail trade, healthcare, social assistance, and hospitality sectors. Resignations dropped to 3.084 million, the lowest since August 2020, which could help curb wage inflation.
The slowdown in the labor market follows a series of rate hikes by the U.S. central bank to combat inflation. Price pressures have eased, allowing the Fed to focus on the labor market. The Fed is expected to cut interest rates again in November and December. September's employment report, due on Friday, is likely to show nonfarm payrolls increased by 140,000 jobs, well below the average monthly gain of 202,000 over the past 12 months.
The unemployment rate is forecast to remain at 4.2%, having risen from 3.4% in April 2023 due to increased labor supply from immigration. A survey from the Institute for Supply Management (ISM) showed factory employment slackening in September, with manufacturing employment and prices paid by manufacturers both declining. A port strike by the International Longshoremen's Association could temporarily disrupt supply chains, though its early impact is expected to be muted.
