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Key Takeaways
- Hiring, quitting, and layoffs all slowed down in August as the job market became increasingly stagnant for workers and employers alike.
- High interest rates have hurt the job market, and officials at the Federal Reserve are slashing borrowing costs to prevent unemployment from spiking.
- The hiring slowdown highlighted how the job market had weakened since the post-pandemic recovery when workers were in high demand.
Finding a job opening was easier in August, but getting hired got tougher amid a cooling labor market.
There were 8 million job openings in August, up from 7.7 million in July, the Bureau of Labor Statistics said Tuesday. It was the first increase in three months and was higher than the 7.7 million forecasters had expected, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal.
Despite the increase in jobs, the number of hires fell to 5.3 million from 5.4 million. As a percentage of the total workforce, the hire rate slipped to 3.3% from 3.4%, hitting its same level in June and the lowest since April 2020.
Workers in a Holding Pattern as Labor Market Stagnates
Overall, the report showed a job market where workers and employers are increasingly stuck in a holding pattern, a distinct change from the immediate aftermath of the pandemic when employers hired at a breakneck pace.
Only 3.1 million people quit their jobs, down from 3.2 million in July and the fewest since August 2020, signaling that fewer workers were confident of finding better opportunities.
At the same time, layoffs fell to 1.6 million from 1.7 million, staying near historically low levels. Daniel Zhao, chief economist at job site Glassdoor, posted on X that the lack of turnover was not a good sign.
“A lack of healthy turnover prevents workers from getting onto and moving up the career ladder,” he said.
Interest Rates Are Pressuring the Job Market
High interest rates for all kinds of loans have dragged on the economy and the job market.
The Federal Reserve has held its benchmark fed funds rate at a high level for the past two years to slow the economy and fight inflation but cut it last month to prevent a sharp increase in unemployment.
While the unemployment rate isn’t high by historical standards, Federal Reserve officials are closely watching job market data for signs of a slowdown. Central bankers have said they could cut interest rates faster to boost the economy if they see cracks starting to appear.