US JOLTS Job openings dropped to 7.079 million in August
According to Tuesday’s Job Openings and Labor Turnover Survey (JOLTS) from the US Bureau of Labor Statistics (BLS), job openings totaled 7.079 million at the end of August. This figure, which came in below analysts’ expectations of 7.23 million, follows the 7.335 million positions reported in July (revised from 7.271 million).
In the news release: “Hires changed little at 5.2 million, while total separations were unchanged at 5.1 million. Within separations, quits (3.1 million) were unchanged, while layoffs and discharges (1.6 million) were essentially unchanged.”
Market reaction
The US Dollar regained upside momentum on Tuesday, climbing to fresh multi-week highs in the 101.40–101.50 region as persistent uncertainty surrounding the Middle East conflict and higher US Treasury yields continued to underpin demand for the buck.
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
Recommended Articles
