The Fed’s Delight
With the Federal Reserve’s September meeting looming over investors’ heads, new labor market data for the month has been released that may have a significant impact on interest rates. On Tuesday, the JOLTs Job Openings report for July was disclosed, depicting the third consecutive month of decreases. For July, job openings fell to 8.8 million, down roughly 338,000 from June. Furthermore, this was the first time since March 2021 that the JOLTS fell under 9 million, showing the pressure high-interest rates have had on future hiring capital. In congruence to Tuesday’s report, Wednesday delivered another economic headline with a similar background, where ADP’s Nonfarm Employment Change for August showed only 177,000 jobs added, far less than the expected 200,000 by Dow Jones analysts.
The negative figures for the labor market portray both the increased efforts by the Federal Reserve to slow the economy and pandemic-inducing hiring coming to a slow halt. One of the biggest issues for the Federal Reserve in the past year has been manipulating the labor market, which is generally an interest-rate-sensitive sphere. Due to the mass labor shortages and shutdowns spurred by the pandemic, many large-scale companies across the nation had a newfound value for strong workforces. Increased hiring and job growth from the past two years has been one of the key targets for the Fed to mitigate as it continues its ultimate path to 2% inflation. As far as financial markets are concerned, it seems that investors have placed roughly a 90% chance that the Federal Reserve will opt to pause interest rates at the next meeting held on September 20th.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.