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US job openings surge fuels speculation of interest rate hike

By Nithya Bose in US Business & Employment News, posted June 2, 2023

Job vacancies at US employers reached a three-month high in April, totaling 10.1 million, according to the Labor Department's Job Openings and Labor Turnover Survey (JOLTS).

The figure exceeded economists' expectations, who had estimated 9.4 million openings.

This surge in job openings provides the Federal Reserve with more incentive to consider raising interest rates once again.

The figure has risen from 9.75 million, an increase of around 358,000.

Philadelphia Fed President Patrick said: "I am in the camp increasingly coming into this meeting thinking that we really should skip, not pause, but skip an increase [in interest rates]."

Harker's statement came during a discussion hosted by the OMFIF Economic and Monetary Policy Institute.

The increase in job vacancies was led by retail , where there were an additional 209,000 openings.

There were 185,000 more jobs in healthcare and social assistance, while vacancies leapt by 154,000 in the transportation, warehousing, and utilities sector.

Considerable rises were also reported in construction as well as finance and insurance industries.

More workers are also staying put.

Workers are growing less confident, leading to fewer resignations.

The "quits rate", which is viewed as a measure of labor market confidence, fell to 2.4 percent from 2.5 percent in March.

The amount of layoffs also fell considerably, dropping 264,000 to 1.6 million - a sign firms may be looking to keep their existing staff.

Alex McDowell, WhatJobs' Global Partnership Director, said: “The figures show job seekers in America have a great deal of choice if they do choose to move on.

“However, it’s clear workers are showing some caution towards handing in their resignations as demonstrated by the ‘quit rate.’

“The drop in the number of layoffs also gives an indication that firms are looking to keep their existing workforce, which is a good thing for workers and their job security.”

With the US technology-heavy Nasdaq 100 Index experiencing a 31 percent surge this year, market strategists hold conflicting opinions regarding the potential overcrowding of investor positions and its impact on the rally.

Julia Pollak, chief economist at ZipRecruiter, told Reuters: "This suggests that the labor market is slackening, despite the reported increase in job openings, and that workers are increasingly sheltering in place in their jobs as better alternatives become less available."

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Meanwhile, in the oil market, West Texas Intermediate prices remained lower as investors digested diverging economic outlooks from the US.

The market saw a fluctuation within a $2 range on Wednesday, with job opening data revealing an unexpected surge and resilient labor demand despite tighter financial conditions.

These developments in job openings and market dynamics will likely influence the Federal Reserve's decision-making regarding interest rate adjustments and economic outlooks.

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