Job Openings Rise Unexpectedly in August

US job openings saw an unexpected increase in August, hinting at some resilience in the cooling labor demand during the third quarter.

The Job Openings and Labor Turnover Survey revealed that the number of available positions, which serves as an indicator of labor demand, rose to 8.040 million at the end of August. This marks an increase from a revised total of 7.711 million in July, contrary to economists’ expectations of a slight decline to 7.640 million.

In July, job openings slipped to their lowest level in three and a half years, a development interpreted as a sign that the US job market was gradually losing momentum, albeit in a stable manner.

The data emerges following a statement from Federal Reserve Chair Jerome Powell, who indicated that future interest rate cuts would likely take a more traditional approach of quarter-point reductions. He emphasized that the trajectory of borrowing costs is not predetermined.

Powell clarified that the Federal Open Market Committee is not in a rush to implement rapid rate cuts, even after a significant 50-basis point reduction announced at its recent meeting.

He defended the previous month’s decision, asserting it reflected the committee’s growing confidence that a recalibrated policy stance could sustain strength in the labor market alongside moderate economic growth and a gradual decline in inflation to 2%.

Powell described the overall economy as being in “solid shape” and committed to utilizing available tools to maintain that status. He also mentioned that “two more cuts,” equating to a total decrease of half a percentage point, would be justified by the end of 2024 if economic conditions progress as anticipated.

In other economic news, the manufacturing purchasing managers’ index for September was recorded at 47.2, consistent with August’s figure, though analysts had predicted a slightly higher number of 47.6. A reading below 50 indicates contraction.

The non-manufacturing PMI, focusing heavily on the services sector, is expected to be released on October 3 and is forecasted to rise to 51.6 from 51.5 in the previous month.

Analysts at Bank of America have predicted that PMI data will suggest a slowdown in broader economic activity in the US, but characterized it as “cooling, not crumbling.”