8.1 million jobs are available in the US despite higher interest rates.

July 2, 2024

Amidst the impact of rising interest rates meant to calm the labor market, U.S. job vacancies increased little to 8.1 million in May. 

In April, the Labor Department announced that there were more open positions than the revised 7.9 million, which was the lowest number since February 2021. The initial number of 8.1 million vacancies for April was revised downward.

From 1.54 million in April to 1.65 million in May, there were more layoffs. The percentage of Americans abandoning their employment, an indicator of their confidence in their future, remained almost constant. 

"The study provided more evidence that the job market is remaining stable. The growth appears to be sound, according to Navy Federal Credit Union economist Robert Frick.

The Federal Reserve's drive to boost interest rates in an effort to control inflation has not affected the US economy or employment market in a very noticeable way. In 2022 and 2023, the Federal Reserve raised its benchmark interest rate eleven times, reaching a 23-year peak. 

In defiance of predictions of a recession, the US economy continued to expand and hiring continued. 

However, there have been indications recently that the economy is slowing down. Since reaching a record of 12.2 million in March 2022, job vacancies have been gradually declining. The job market is robust. In January 2023, there were two jobs for every jobless American; now, that ratio has decreased to 1.25 jobs.

Less employment opportunities are welcomed by Fed policymakers as a relatively straightforward method to calm a heated labor market and lessen pressure on businesses to boost salaries, which may fuel inflation. 

This year's GDP expanded at its weakest annual rate since spring 2022, 1.4%, from January to March. Approximately 70% of the U.S. economy is made up by consumer expenditure, which increased by just 1.5% in 2023 after increasing by more than 3% in the previous two quarters.

Based on a survey of forecasts conducted by the data firm FactSet, the Labor Department is projected to publish on Friday that businesses added 190,000 jobs last month, down from 272,000 in May. The 4% unemployment rate is expected to remain low.

From a four-decade peak of 9.1% in June 2022, high interest rates have contributed to the inflation rate's decline to around the Fed's objective of 2% annually. It is anticipated that the central bank will be able to begin reducing rates if price hikes are contained. Investors on Wall Street anticipate the Fed's September meeting to see the first rate reduction. 

During a conference in Portugal on Tuesday, Federal Reserve Chair Jerome Powell stated that although there was a pause earlier in the year, there now seems to be renewed momentum towards reduced inflation. However, he emphasized that before the Fed reduced rates, it wanted to see more proof.