In July, U.S. job openings increased to a record high, indicating a slowdown in job growth last month was a deviation and that the labor market was strong before the most recent hurricanes. The monthly Job Openings and Labor Turnover Survey, or JOLTS, released by the Labor Department on Tuesday (9/12) displayed the labor market continued to firm among a lack of workers.
The strong labor market fundamentals could endorse the Federal Reserve to continue tightening monetary policy this year despite inflation consistently running below the U.S. central bank’s 2 percent target.
“Employers need skilled labor and experienced workers are in short supply, which continues to suggest the economy has returned to a relatively normal labor market that does not need exceptional support from the Fed,” stated John Ryding, chief economist at RDQ Economics.
Job openings, a gauge of labor demand, advanced by 54,000 to a seasonally revised 6.2 million. That was the highest level since the data series begun in December 2000. Job openings have now been above 6 million for two consecutive months. Hiring advanced 69,000 to 5.5 million in July, lifting the hiring rate to a near 1-1/2-year high of 3.8 percent from 3.7 percent in June.
Labor market tightness was also highlighted by another report from the National Federation of Independent Business.
Nonfarm payrolls advanced by 156,000 jobs in August, with the private services sector hiring the smallest number of workers in five months. Job growth in September could, however, be pulled back by hurricanes Harvey and Irma, which struck Texas and Florida, separately.
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The two states amount for roughly 14 percent of U.S. employment. Temporary unemployment as a result of flooding from Harvey has already caused a hike in first-time applications for jobless benefits.
“The JOLTS data signal that the labor market was in solid shape in July and support our view that we should not be very concerned about the modest disappointment in the August payroll report,” quoted Daniel Silver, an economist at JPMorgan.
JOLTS is one of the job market metrics on Fed Chair Janet Yellen’s dashboard. Economists anticipate the U.S. central bank will announce a plan to start trimming its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities at its Sept. 19-20 policy meeting.
Job openings in transportation, warehousing and utilities gained 70,000 in July and educational services had an additional 26,000 vacancies. There were 20,000 more job openings in construction.
Manufacturing, however, saw a 29,000 decline in vacancies in July. Health care and social assistance job openings dropped 72,000 and federal government vacancies fell 21,000.
Roughly 3.2 million Americans voluntarily quit their jobs in July, advanced from 3.1 million in June. The quits rate, which the Fed looks at as a measure of job market confidence, increased to 2.2 percent from 2.1 percent in June.
“One of the problems facing firms is that workers are still pretty much locked into their current positions,” said Joel Naroff, chief economist at Naroff Economic Advisors. “With companies unwilling to bid for workers from other firms, there is little reason to leave and that is limiting the availability of qualified workers.”
Layoffs declined 23,000 to 1.78 million in July.