The U.S. Department of Labor said on Monday the economy had many more unfilled jobs at the end of July than leading economists had predicted. The troubling report shows the latest interest rate hikes by the Federal Reserve have not cooled off the labor market, signaling that soaring inflation isn’t going anywhere quickly.
The report indicated there were around 11.2 million open jobs at the end of July, far above the projected number of 10.4 million. There were 10.7 million vacant jobs initially reported at the end of June, but that figure was revised upward to 11 million. The June revision indicates the job market was more inflationary than originally thought.
Job Openings Unexpectedly Surge To Two For Every Unemployed Worker, Crashing Fed's Plans To Nuke The Job Market https://t.co/w9inrcQNOT
— zerohedge (@zerohedge) August 30, 2022
As the consumer price index has shown price inflation running this summer at 40-year highs, the Federal Reserve has been announcing significant interest rate increases in an attempt to cool down the economy and get prices under control. That would necessarily imply reductions in job openings to attempt to ease the labor market without creating significant increases in unemployment.
Fed chair Jerome Powell said in May that the central bank was searching for a “path by which we would be able to moderate demand in the labor market and have vacancies go down without having unemployment going up.”
Unfortunately, this week’s jobs report for July shows the economy is not on the path Powell envisioned in May.
Last month, there were 528,000 workers added to payrolls and a drop in unemployment to 3.5%. The total number of unemployed Americans searching for work dropped in July to 5.67 million.
The latest numbers show that there are almost two vacant jobs for every unemployed American, almost reaching the all-time record set back in March of this year.
The number of people who quit jobs in July remained about the same at 4.2 million. Monthly “quits” topped 4 million for the first time ever last year. The elevated number of quits is seen as part of a trend that began during the COVID-19 pandemic that has come to be called the “great resignation.”
Before the economic downturn that came with the pandemic, monthly quits typically ran at less than 3 million each month. The fact that the number of quits is remaining high indicates the labor market is still very tight. Workers are more likely to voluntarily quit their jobs when they expect to easily pick up another or already have a competing offer.
The July number of layoffs held steady at around 1.4 million. That low number indicates that businesses are doing what they can to keep existing employees even though some parts of the economy are experiencing slowdowns.
Meanwhile, the Fed is likely to continue to struggle with using interest rates as a mechanism for getting people to go back to work.