WASHINGTON (AP) — The number of open jobs in the United States rose in July after three months of decline, a sign that employers are still urgently looking for workers despite a shrinking economy and high inflation.
The increase announced by the government on Tuesday will be a disappointment for Federal Reserve officials, who seek to cool hiring and the economy by raising short-term interest rates in an attempt to slow borrowing and spending, which tend to fuel inflation. Fed officials hope their policies will serve primarily to reduce job openings and spare workers the pain of widespread layoffs and rising unemployment.
There were 11.2 million open jobs available on the last day of July – almost two jobs, on average, for every unemployed person – compared to 11 million in June. The June figure was also revised upwards.
“The Fed has made very little progress in terms of closing the gap between labor supply and demand,” Aneta Markowska, chief economist at investment bank Jefferies, wrote in a statement. research note.
Reducing the strong demand for workers to a level closer to the available supply would ease the pressure on companies to pay higher wages in order to attract and retain workers. Many companies passed on the higher wages to consumers in the form of higher prices, thus intensifying inflation.
Last month, job openings rose in retail, warehousing and shipping, professional services, and state and local education. Openings fell in manufacturing and health care.
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The number of people who left their jobs fell slightly in July, to 4.18 million from 4.25 million in June, according to Tuesday’s report. People usually leave their jobs for a new position, usually with a higher salary. Therefore, fewer resignations could reduce the pressure on companies to raise wages. But quitting still remains well above pre-pandemic levels, when it rarely topped 3 million.
The data released on Tuesday also included a measure of layoffs, which fell slightly in July. Despite high-profile reports of job cuts, the report reinforced the impression that most companies retain the vast majority of their employees.
Vacancies have increased since the economy began to recover from the pandemic recession more than two years ago. As demand quickly rebounded, employers sought to add workers quickly.
When COVID-19 hit and widespread shutdowns were imposed in March and April 2020, businesses cut 22 million jobs. Yet not all the workers returned as the economy recovered. There are now fewer people working or looking for work compared to pre-pandemic trends. The number of open jobs hit a record high of 11.9 million in March, before falling for three months. Before the pandemic, they had never exceeded 8 million.
The latest figures suggest that the demand for workers remains high. The government will release its monthly jobs report on Friday, which is expected to show 300,000 jobs added, a slowdown from the previous month when hiring topped half a million, but still a healthy figure.
Fed Chairman Jerome Powell and other policymakers have said they hope to reduce the number of open jobs without causing much higher unemployment. Larry Summers, former Treasury Secretary, and Olivier Blanchard, former chief economist of the International Monetary Fund, have argued that such an outcome is unlikely.
“A reduction in vacancies (of jobs) can take place without a significant loss of jobs, and this is the kind of soft landing anticipated” by Fed officials, said member Christopher Waller last month. of the board of governors of the central bank.
The Fed is trying to engineer a so-called soft landing — a slowing economy that lowers inflation — currently near four-decade highs — without causing a recession.
Yet Blanchard and Summers argue that historically, job openings have never declined without a concomitant increase in layoffs.
“The sad truth is that there is no slowdown without rising unemployment,” Blanchard wrote earlier this month, calling the Fed’s efforts to reduce job vacancies without increasing layoffs a “vain hope. “.