Job Vacancies Rose in July, Dashing Fed Hopes for Cooling

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FILE - A hiring sign is placed at a booth for prospective employers during a job fair Wednesday, Sept. 22, 2021, in the West Hollywood section of Los Angeles. The California Employment Development Department said Friday, Aug. 19, 2022, that the state's unemployment rate was 3.9% in July. That's the lowest since 1976 when the state began using its current method of measuring job growth(AP Photo/Marcio Jose Sanchez, File)

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The number of open jobs in the United States rose in July after three months of declines, a sign that employers are still urgently seeking workers despite a weakening economy and high inflation.

The increase that the government reported Tuesday will be a disappointment for Federal Reserve officials, who are seeking to cool hiring and the economy by raising short-term interest rates to try to slow borrowing and spending, which tend to fuel inflation.

There were 11.2 million open jobs available on the last day of July — nearly two jobs, on average, for every unemployed person — up from 11 million in June. June’s figure was also revised sharply higher.

“The Fed has made very little progress in terms of narrowing the gap between labor supply and demand,” Aneta Markowska, chief economist at investment bank Jefferies, wrote in a research note.

Reducing the high demand for workers to a level closer to the available supply would ease the pressure on companies to pay higher wages to attract and keep workers. Higher pay has been passed on by many businesses to consumers in the form of higher prices, thereby intensifying inflation.

Last month, job openings rose in retail, warehousing and shipping, professional services, and in state and local education. The number of openings declined in manufacturing and health care.

The number of people who quit jobs also declined slightly in July, to 4.18 million from 4.25 million in June. People typically quit jobs for a new position, usually at higher pay. As a result, fewer quits could lessen the pressure on companies to raise pay. But quitting still remains far above pre-pandemic levels, when it rarely topped 3 million.

Job vacancies have been elevated since the economy began recovering from the pandemic recession more than two years ago. As demand has rapidly rebounded, employers have sought to quickly add workers.

When COVID-19 struck and widespread shutdowns were imposed in March and April of 2000, businesses slashed 22 million jobs. Yet not all workers have returned as the economy has recovered. There are now fewer people working or looking for work compared with pre-pandemic trends. The number of open jobs reached a record level of 11.9 million in March, before declining for three months. Before the pandemic, they had never topped 8 million.

The latest figures suggest that demand for workers remains hot. On Friday, the government will release its monthly jobs report, which is expected to show that 300,000 jobs were added, a slowdown from the previous month when hiring topped a half-million, but still a healthy number.

Fed Chair Jerome Powell and other policymakers have said they hope to reduce the number of open jobs without causing higher unemployment. Larry Summers, a former Treasury Secretary, and Olivier Blanchard, former chief economist of the International Monetary Fund, have argued that such an outcome is unlikely.

(AP)