U.S. job openings rose slightly to 8.1 million in May despite the impact of higher interest rates intended to cool the labor market. Vacancies rose from a revised 7.9 million in April, the first reading below 8 million since February 2021, the Labor Department reported Tuesday.
Quick Read
- U.S. job openings rose to 8.1 million in May, up from 7.9 million in April, despite higher interest rates aimed at cooling the labor market.
- This rise follows the first reading below 8 million since February 2021.
- Layoffs increased slightly, while the number of Americans quitting their jobs, an indicator of confidence in job prospects, remained stable.
- The U.S. economy and job market have shown resilience against the Federal Reserve’s interest rate hikes, which aimed to control inflation by elevating rates 11 times in 2022 and 2023.
- Although signs of economic slowdown have emerged, job openings have steadily declined from a peak of 12.2 million in March 2022.
- The current job market remains strong with 1.25 jobs for every unemployed American, though this is down from a 2-to-1 ratio in January 2023.
- Fed policymakers view lower job openings as a method to cool the job market and reduce wage pressure, which can contribute to inflation.
- Economic growth has slowed, with the economy growing at an annual pace of 1.4% from January through March 2024, the slowest since spring 2022.
- Consumer spending, which constitutes about 70% of U.S. economic activity, grew by 1.5%, down from over 3% in the last two quarters of 2023.
- The Labor Department is expected to report on Friday that employers added 190,000 jobs in June, down from 272,000 in May, with unemployment forecasted to remain low at 4%.
- High interest rates have brought inflation closer to the Fed’s 2% target, down from a 9.1% four-decade high in June 2022, leading to expectations of a potential rate cut at the Fed’s September meeting.
The Associated Press has the story:
US job openings rise to 8.1 million despite higher interest rates
Newslooks- WASHINGTON (AP) —
U.S. job openings rose slightly to 8.1 million in May despite the impact of higher interest rates intended to cool the labor market. Vacancies rose from a revised 7.9 million in April, the first reading below 8 million since February 2021, the Labor Department reported Tuesday.
Layoffs rose slightly, and the number of Americans quitting their jobs — a sign of confidence in their prospects — was basically unchanged.
The U.S. economy and job market have been remarkably resilient in the face of the Federal Reserve’s campaign to raise interest rates to rein in inflation. The Fed hiked its benchmark rate 11 times in 2022 and 2023, lifting it to a 23-year high.
Defying expectations of a recession, the U.S. economy kept growing and employers kept hiring.
But lately there have been signs the economy is losing some steam. Job openings have come steadily down since peaking at 12.2 million in March 2022. The job market is still strong. There are 1.25 jobs for every unemployed American, but that’s down from a 2-to-1 ratio in January 2023.
Fed policymakers welcome lower job openings — a relatively painless way to cool a hot job market and reduce pressure on companies to raise wages, which can feed inflation.
From January through March this year, the economy grew at an annual pace of just 1.4%, slowest since spring 2022. Consumer spending, which accounts for around 70% of U.S. economic activity, expanded just 1.5% after advancing at a pace of more than 3% in each of the last two quarters of 2023.
The Labor Department is expected to report Friday that employers added 190,000 jobs last month, down from 272,000 in May, according to a survey of forecasters by the data firm FactSet. Unemployment is forecast to stay low at 4%.
High interest rates have helped bring inflation down closer to the Fed’s target of 2% a year from a four-decade high 9.1% in June 2022. Progress on containing price increases is expected to allow the central bank to start cutting rates. Wall Street investors are expecting the first rate cut at the Fed’s September meeting.
