US job openings rise in July; consumer confidence rebounds

By Reuters

Published: Tue 30 Aug 2022, 9:34 PM

US job openings increased in July and data for the prior month was revised sharply higher, pointing to persistently strong demand for labour that is giving the Federal Reserve cover to maintain its aggressive interest rate increases.



The labour Department's Job Openings and labour Turnover Survey, or JOLTS report, on Tuesday, showed there were 2 jobs for every unemployed person last month, pointing to extremely tight labour market conditions. Millions continued to voluntarily quit their jobs, a sign of confidence in the labour market.

"The Fed has front-loaded its monetary restraint this year to an unprecedented degree and the economy isn't giving them any reason to hold back," said Christopher Rupkey, chief economist at FWDBONDS in New York. "The labour market is strong as a bull, two jobs out there for the unemployed to choose from."

Job openings, a measure of labour demand, increased 199,000 to 11.239 million on the last day of July. Data for June was revised higher to show 11.040 million job openings instead of the previously reported 10.698 million. Economists polled by Reuters had forecast 10.450 million vacancies.

There were an additional 81,000 job openings in the transportation, warehousing and utilities industries last month. Job openings increased by 53,000 in the arts, entertainment and recreation sector, while the federal government had 47,000 more openings and state and local government education had an additional 42,000 unfilled jobs. But job openings decreased by 47,000 in the durable goods manufacturing industry.

The Fed is trying to cool demand for labour and the overall economy to bring inflation down to its 2 per cent target.

Fed Chair Jerome Powell warned last week that Americans were headed for a painful period of slow economic growth and possibly rising unemployment as the US central bank aggressively raises interest rates in a bid to bring supply and demand back into balance. The Fed has raised its policy rate by 225 basis points since March.

The job openings rate climbed to 6.9 per cent last month from 6.8 per cent in June. Hiring slipped to 6.382 million from 6.456 million in June, keeping the hiring rate unchanged at 4.2 per cent

Layoffs dropped to 1.398 million from 1.400 million in June. About 4.179 million people quit their jobs, down from 4.253 million in June. The quits rate, viewed by policymakers and economists as a measure of job market confidence, dipped to 2.7 per cent from 2.8 per cent in June.

There was a jump in resignations in the transportation, warehousing and utilities industries. But fewer workers quit in the healthcare and social assistance category as well as in state and local government education.

Confidence in the labour market was underscored by a separate report from the Conference Board on Tuesday showing its so-called labour market differential, derived from data on respondents' views on whether jobs are plentiful or hard to get, edged down to a still-high 36.6 this month from a reading of 36.8 in July. This measure correlates to the unemployment rate from the labour Department.

US stocks fell on the data. The dollar was largely unchanged against a basket of currencies. US Treasury prices were mixed.

"Markets will misread this report as an indication that the Fed will hike rates more than expected," said Jamie Cox, managing partner at Harris Financial Group in Richmond, Virginia. "The Fed is prone to mistakes and there is a very good chance that inflation comes down for reasons other than rate increases."

VACATION PLANS INCREASE

The Conference Board's overall consumer confidence index rebounded to 103.2 this month from 95.3 in July, ending three straight monthly declines. Economists had forecast the index would climb to 97.7. Consumers' inflation expectations over the next 12 months fell to 7.0 per cent from 7.4 per cent in July.

Despite the high inflation expectations, the share of consumers planning to go on vacation over the next six months increased to an eight-month high.

There was also an increase in the share of consumers planning to buy motor vehicles as well as major household appliances like refrigerators, washing machines, dryers and televisions over the next six months, which could keep consumer spending supported in the third quarter and the economy growing.

Moderate consumer spending helped to blunt some of the hit on the economy from a sharp slowdown in the pace of inventory accumulation by businesses in the second quarter because of bottlenecks in supply chains. Gross domestic product fell at 0.6 per cent annualized rate last quarter after contracting at a 1.6 per cent pace in the January-March quarter.

Despite higher mortgage rates resulting from the Fed's aggressive monetary policy posture, more consumers planned to buy a house over the next six months. That suggests that annual house price growth could remain elevated, despite some moderation in the pace of monthly house price inflation.

A third report on Tuesday showed the S&P CoreLogic Case-Shiller national home price index increased 18.0 per cent on a year-on-year basis in June after surging 19.9 per cent in May.

The strong annual house price growth was corroborated by a fourth report from the Federal Housing Finance Agency showing home prices increased 16.2 per cent in the 12 months through June after rising 18.3 in May.


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