In the month of August, the number of available U.S. jobs plummeted compared to July as businesses grew less desperate for workers — a common trend likely to cool chronically-high inflation.
The federal government reported on Tuesday that layoffs in August remained historically low and that hiring remained unchanged.
“Employers are thinking about who they don’t need to hire, but not thinking about who they need to lay off,” stated Layla O’Kane, a senior economist at labor analytics firm Lightcast, per WFAA.
The report suggests that businesses have been taking down job postings and reassessing their need for workers but have yet to consider cutting workers or freezing hiring altogether — a favorable scenario for the Federal Reserve in its bid to bring down inflation without forcing a recession through more steep interest rate hikes.
“This helps bring that inflation pressure down and reassures the Fed that maybe there is a road out of this without dramatically pushing up the unemployment rate,” stated LHMeyer economist Derek Tang.
Tuesday’s job news seemed to buoy U.S. markets. It showed that in August, only 10.9 million jobs were advertised, down one million from July, bolstering the Dow Jones by 770 points, clocking a 2.5% increase during mid-morning trading.
Still, with wages increasing at a rate of 6.5% on average over last year, something the Fed sees as unsustainably high, inflation may continue at pace.
Speaking with CNBC about Tuesday’s stock bounce, Holly Newman Kroft, senior wealth advisor at Neuberger Berman, stated, “People like to hang onto good news but… we’re not going to have a recovery in this market until the Fed signals that they’re going to stop raising rates, and that’s not going to happen until inflation starts coming down.”
Back in March, interest rates sat near zero, but with inflation increasing at an alarming rate, the Fed took drastic measures to halt its incline by raising interest rates nearly every month.
The Fed hiked rates so much that the United Nations Conference on Trade and Development urged the Fed and other central banks around the world to slow its rate hikes, warning of a possible monetary policy-induced recession that would have severe consequences for developing countries, calling the strategy an “imprudent gamble” that might “usher in a period of stagnation and economic instability for many developing countries and some developed ones.”
Inflation currently stands at 8.52%, slightly lower from 9.1% in June, though more pain is predicted with unemployment remaining steady.
