WASHINGTON – US job openings increased marginally in August while hiring declined, consistent with lackluster labor market conditions that could allow the Federal Reserve to cut interest rates again next month despite resilient consumer spending.
Households are also growing pessimistic about the labor market. A survey from the Conference Board on Tuesday showed the share of consumers viewing jobs as “plentiful” fell this month to the lowest level since early 2021. There were 0.98 job openings for every unemployed person in August compared to 1.0 in July.
The labor market has almost stagnated amid slowing demand for workers, with economists blaming a lagging drag from uncertainty stemming from tariffs on imports as well as the rise of artificial intelligence. An immigration crackdown has also reduced labor supply, creating what Fed Chair Jerome Powell has described as a “curious balance.”
“The labor market remains lethargic but is not getting rapidly sicker,” said Samuel Tombs, chief US economist at Pantheon Macroeconomics.
Job openings, a measure of labor demand, rose 19,000 to 7.227 million by the last day of August, the Labor Department’s Bureau of Labor Statistics said in its Job Openings and Labor Turnover Survey, or JOLTS report. Economists polled by Reuters had forecast 7.185 million unfilled jobs.
With the government likely to shut down when funding runs out at midnight on Tuesday, the report could be the last key economic data for a while. The Labor and Commerce departments said on Monday all data releases, including September’s employment report due on Friday, would be suspended.
Job openings decreased 115,000 in the construction sector but were partly offset by a 106,000 increase in unfilled positions in the accommodation and food services industry.
There were also more vacancies at retailers as well as in state and local government, excluding education. But federal government job openings fell 61,000 amid spending cuts. The job openings rate was unchanged at 4.3%.
Hiring decreased 114,000 to 5.126 million in August, concentrated in the trade, transportation and utilities industry. Accommodation and food services hiring also declined, likely the result of immigration raids that have led to deportations and kept fearful workers at home.
EMPLOYERS HOLDING ON TO WORKERS
The hires rate fell to 3.2% from 3.3%. Employers continued to hold on to their workers, with layoffs dropping 62,000 to 1.725 million. There were fewer layoffs in the trade, transportation and utilities industry. The layoffs rate was unchanged at 1.1% for a third straight month.
Weak hiring, however, means people who lose their jobs will have a tough time finding new opportunities. The Conference Board survey showed the share of consumers viewing jobs as plentiful dropped to 26.9% this month, the lowest level since February 2021, from 30.2% in August. There was no change in the proportion perceiving jobs as “hard” to get.
The survey’s so-called labor market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, narrowed to a more than 4-1/2-year low of 7.8 from 11.1 last month. This measure correlates to the unemployment rate in the Labor Department’s monthly employment report.
Economists said this suggested the jobless rate could rise further after climbing to 4.3% in August. The US central bank resumed easing policy this month, cutting its benchmark overnight interest rate by 25 basis points to the 4.00%-4.25% range, to aid the labor market.
Nonfarm payroll gains averaged only 29,000 jobs per month in the three months to August compared to 82,000 during the same period last year. But a raft of fairly strong reports, including second-quarter gross domestic product and August consumer spending, raised questions about whether more rate reductions were warranted this year.
Economists expect the Fed to put more emphasis on the labor market, though a government shutdown would leave policymakers without key data ahead of their October 28-29 meeting.
“The Fed has a bias to cut unless the labor market shows signs of improvement, but the fog the central bank sets monetary policy in may get thicker because the partial federal government shutdown could delay the release of the September employment report,” said Ryan Sweet, chief US economist at Oxford Economics.
Workers are remaining in their jobs, with resignations declining for the third straight month to a nine-month low.
The quits rate, a gauge of labor market confidence, fell to an eight-month low of 1.9% having held at 2.0% for three consecutive months. That also suggested slower wage growth, which could undercut consumer spending, the economy’s engine.
Indeed, the Conference Board survey showed consumers less inclined to make big-ticket purchases like motor vehicles and major appliances like refrigerators and washing machines over the next six months. Fewer planned to spend on travel-related services. Overall consumer confidence hit a five-month low.
“Consumer confidence is a factor in determining consumer spending, but it is not the dominant factor,” said Carl Weinberg, chief economist at High Frequency Economics. “Rattled consumers spend less than confident consumers.” — Reuters
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