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Job openings unexpectedly rose in August by 690,000 in a surprise that was led by a jump in demand for workers in business services, the Labor Department reported on Tuesday.
Instead of holding roughly steady at 8.8 million, the number came in at 9.6 million with an increase of 690,000 in the business and professional services category. Other areas where demand rose included finance and insurance (up by 96,000), state and local government education (up 76,000), nondurable goods manufacturing (up 59,000), and federal government (up 31,000).
“Jumpin’ JOLTS. Job openings rise to 9.6 mil from 8.8 mil last month. Way above expectations,” Kathy Jones, chief fixed income analyst at the Charles Schwab Center for Financial Research, posted on social media.
Other details in the report showed that the labor market remained steady, with the number of hires, quits and layoffs largely stable. That means analysts will wait for other data on the job market out this week to see whether the job openings report is an anomaly. The job openings data lag the other labor market reports this week by a month.
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“We expect September to be pretty steady, but we’re optimistic about October,” says Geno Cutolo, head of North America for staffing firm Adecco. “The labor market is still growing.”
On Wednesday, private payroll firm ADP will release its monthly survey of employers with expectations for a gain of 150,000 jobs last month, down from 177,000 in August.
On Friday, the government will release its monthly jobs report for September with analysts looking for a continued moderation in the pace of growth in employment.
“According to the Labor Department, employers added an average of 399,000 jobs in 2022,” said Bankrate Senior Economic Analyst Mark Hamrick. “So far in 2023, the total monthly hiring average has settled down to 236,000, and 150,000 jobs added from June through August.
“For the September snapshot, economists are generally looking for something a bit below the August hiring pace of 187,000 jobs, with the unemployment rate slipping slightly to 3.7% from August’s 3.8%, the highest since February 2022,” Hamrick added.
A weakening in the job market, along with continued declines in the rate of inflation, is what the Federal Reserve will look for as it maintains interest rates at high levels and ahead of its next meeting in November.
“The Fed has done the job it needed to,” says Brij Khurana, fixed income portfolio manager at Wellington Management. “We are seeing a marked decline in inflation.”
But Khurana says the labor market could surprise to the downside as companies deal with higher interest rates and declining consumer savings levels.
“I am of the belief the labor market can deteriorate more quickly” than many expect, he says.
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