Job postings sink amid higher rates and slower growth

WASHINGTON — The number of available jobs in the U.S. plummeted in August compared with July, a sign that businesses may pull back further on hiring and potentially cool chronically high inflation.

There were 10.1 million advertised jobs on the last day of August, the government said Tuesday, down a huge 10% from 11.2 million openings in July. In March, job openings had hit a record of nearly 11.9 million.

Layoffs ticked up in August but remained at a historically low level, according to the report, known as the Job Openings and Labor Turnover survey, or JOLTS. And slightly more people quit their jobs, in most cases likely for better jobs elsewhere.

The sharp drop in job openings will be welcomed by the Federal Reserve, which is hoping to reduce the demand for workers by raising its key short-term interest rate. While workers typically welcome larger raises, the Fed sees the current pace of wage increases — at about 6.5% a year, according to some measures — as unsustainably high and a key driver of inflation.

Chair Jerome Powell and other Fed officials hope that their interest rate hikes will cause employers to slow their efforts to hire more people. Fewer job openings, in turn, could reduce the pressure on companies to raise pay to attract and keep workers.

“This helps bring that inflation pressure down and reassures the Fed that maybe there is a road out of this without dramatically pushing up the unemployment rate,” said Derek Tang, an economist at LHMeyer, an economic research firm.

Smaller pay raises, if sustained, should ease inflationary pressures. In their effort to combat the worst inflation in 40 years, the central bank has raised its key short-term interest rate to a range of 3% to 3.25%, up sharply from nearly zero as recently as March.

Powell has warned that the rate hikes will likely lead to higher unemployment and potentially a recession.