The Rabid Capitalist

Professor Glenn A. Okun

The unexpected rise in US job openings in August, driven by a surge in white-collar postings, demonstrates the resilience of labor demand.  Continued strength in the labor market, however, could lead the Federal Open Market Committee to pursue another rate hike.

The Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey, or JOLTS, revealed Tuesday that the number of available positions increased from 8.92 million in July to 9.61 million in August. Increased hiring occurred while reductions remained minimal.

The number of openings exceeded all expectations. After the report, Treasury yields increased and the S&P 500 declined.

The quits rate, which measures voluntary job departures as a proportion of total employment, remained unchanged at 2.3%, matching the lowest level since the year 2020. Fewer departures suggest that Americans are less confident in their ability to find new employment in the current labor market.

Reluctant quitting restricts labor supply at a time of high labor demand.  If this persists, wage-based inflation becomes an inevitability, and with it, further increases in interest rates.