The number of job openings ticked up in July after three straight months of declines as the labor market continues to show strength despite the Federal Reserve’s efforts to slow economywide spending through massive hikes in its interest rate target.
Openings across all sectors increased to 11.2 million in July, up slightly from 10.7 million the month before, according to data released on Tuesday by the Bureau of Labor Statistics. The previous record number of job openings was notched in March, which was upwardly revised to 11.9 million.
The largest increases in job openings were in transportation, warehousing, and utilities; arts, entertainment, and recreation; and the federal government.
Total hires and separations changed little from the month before.
CHAIRMAN POWELL WARNS FED WILL BRING DOWN INFLATION, EVEN IF IT MEANS ‘PAIN’
The numbers come as the Fed jacks up interest rates more aggressively and tightens its monetary policy to combat explosive inflation. The central bank raised rates by half a percentage point in May and then took the even more aggressive step of hiking rates by three-fourths of a percentage point in June and July — the most ambitious upward hikes since 1994.
The Fed’s action is designed to slow spending and eventually drive down prices. Some economists have argued that the Fed isn’t moving fast enough and pointed to hot spots in the economy, such as the high number of job openings, as evidence.
Fed Chairman Jerome Powell’s annual address at Jackson Hole, Wyoming, on Friday spooked investors because he hinted that another massive hike of 75 basis points might be in store following the central bank’s September meeting. Powell warned that the road to bringing down explosive inflation will likely entail some economic pain along the way.
“Reducing inflation is likely to require a sustained period of below-trend growth,” Powell said. “Moreover, there will very likely be some softening of labor market conditions. While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses.”
The speech has contributed to fears that the United States is careening toward a recession, a scenario that some economists contend has already arrived.
The U.S. has had two quarters of negative GDP growth, with the economy contracting 0.6% in the last quarter.
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Despite the two quarters of negative growth, the labor market has remained tight, something that conflicts with the notion the economy is in recession. Powell warned Friday that it isn’t likely going to remain that way as the rate hikes crack the economy.
While job openings, in aggregate, have been declining, they are still historically high, which could give the Fed a bit more ammunition in arguing that bigger rate hikes are necessary to drive down inflation.
