US job openings unexpectedly rebounded in August as the labor market remains surprisingly resilient in the face of the Federal Reserve’s aggressive interest-rate hike campaign.
The Labor Department said Tuesday there were 9.6 million job openings in August, a marked increase from the revised 8.92 million openings reported the previous month.
Economists surveyed by Refinitiv expected a reading of 8.8 million. It marked the first time in three months that job listings trended higher.
The Federal Reserve closely watches these figures as it tries to gauge labor market tightness and wrestle inflation under control.
The higher-than-expected figure indicates that demand for employees still outpaces the supply of available workers.
The central bank has responded to the inflation crisis and the extremely tight labor market by raising interest rates at the fastest pace in decades.
Officials have so far approved 11 rate hikes, lifting the federal benchmark funds rate to the highest level since 2001. Policymakers have signaled that an additional rate hike is on the table this year if economic data points to a resurgence in price pressures.
The latest jobs data could give policymakers more space to hike rates higher and hold them at elevated levels for longer.
“Any wonder why the Fed expects to raise interest rates again?” said Greg McBride, chief financial analyst at Bankrate. “With 1.5 job openings for every unemployed worker, there is little evidence of substantial easing in labor market demand, a risk to getting inflation lower.”
The uptick in vacancies last month largely stemmed from professional and business services, finance and other services and nondurable goods manufacturing, according to the report.
Job openings remain historically high. Before the COVID-19 pandemic began in early 2020, the highest on record was 7.6 million.
There are roughly 1.5 jobs per unemployed American.
“One of the top items the Fed wants to see is labor supply match labor demand, and the economy is not quite there yet,” said Jeffrey Roach, chief economist at LPL Financial.
The number of Americans quitting their jobs, meanwhile, ticked higher to 3.6 million, or roughly 2.3% of the workforce, indicating that workers remain confident they can leave their jobs and find employment elsewhere.
Switching jobs has been a windfall for many workers over the past year: Job-switchers saw their real hourly wage increase 6.4% in July, compared with a 5.4% pay increase for workers who stayed in the same job, according to recent Atlanta Fed data.
Did you know there’s a critical product – one without which we’d all be dead – which Europe is actually importing more of from Russia now than before the invasion of Ukraine?
It might feel a bit pointless, given how much chat there is right now about the end of the Ukraine war, to spend a moment talking about economic sanctions and how much of a difference they actually made to the course of the war.
After all, financial markets are already beginning to price in the possibility of a peace deal between Russia and Ukraine. Wholesale gas prices – the ones which change every day in financial markets as opposed to the ones you pay at home – have fallen quite sharply in the past couple of weeks. European month-ahead gas prices are down 22% in the past fortnight alone. And – a rare piece of good news – if that persists it should eventually feed into utility bills, which are due to rise in April, mostly because they reflect where prices used to be, as opposed to where they are now.
But it’s nonetheless worth pondering sanctions, if for no other reason than they have almost certainly influenced the course of the war. When it broke out, we were told that economic sanctions would undermine Russia‘s economy, making it far harder for Vladimir Putin to wage war. We were told that Russia would suffer on at least four fronts – it would no longer be able to buy European goods, it would no longer be able to sell its products in Europe, it would face the seizure of its foreign assets and its leading figures would face penalties too.
The problem, however, is that there has been an enormous gap between the promise and the delivery on sanctions. European goods still flow in large quantities to Russia, only via the backdoor, through Caucasus and Central Asian states instead of directly. Russian oil still flows out around the world, though sanctions have arguably reduced prices somewhat.
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Luxury cars still getting to Russia
The upshot is Russia has still been able to depend on billions of euros of revenue from Europe, with which it has been able to spend billions of euros on components sourced, indirectly, from Europe. Its ability to wage war does not seem to have been curtailed half as much as was promised back in 2022. That in turn has undoubtedly had an impact on Russia’s success on the battlefield. The eventual peace deal is, at least to some extent, a consequence of these leaky sanctions, and of Europe’s reluctance to wage economic war, as opposed to just talking about it.
A stark example is to be found when you dig deeper into what’s actually happened here. On the face of it, one area of success for sanctions is to be seen in Europe’s gas imports. Back before the conflict, around half of all the EU’s imported gas came from Russia. Today that’s down to around 20%.
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But now consider what that gas was typically used for. Much of it was used to heat peoples’ homes – and with less of it around, prices have gone sharply higher – as we are all experiencing. But the second biggest chunk of usage was in the industrial sector, where it was used to fire up factories and as a feedstock for the chemicals industry. And that brings us back to the mystery product Europe is now importing more of than before the invasion.
One of the main chemicals produced from gas is ammonia, a nitrogen-based chemical mostly used in fertilisers. Ammonia is incredibly important – without it, we wouldn’t be able to feed around half of the population. And since gas prices rose sharply, Europe has struggled to produce ammonia domestically, turning off its plants and relying instead on imports.
Which raises a question: where have most of those imports come from? Well, in the UK, which has imposed a clear ban on Russian chemical imports, they have come mostly from the US. But in Europe, they are mostly coming from Russia. Indeed, according to our analysis of European trade data, flows of nitrogen fertilisers from Russia have actually increased since the invasion of Ukraine. More specifically, in the two-year pre-pandemic period from 2018 to 2019, Europe imported 4.6 million tonnes, while the amount imported from Russia in 2023-24 was 4.9 million tonnes.
It raises a deeper concern: instead of weaning itself off Russian imports, did Europe end up shifting its dependence from one category of import (gas) to another (fertiliser)? The short answer, having looked at the trade data, is a pretty clear yes.
Something to bear in mind, next time you hear a European leader lecturing others around the world about their relations with Russia.
Care providers have warned the government that the UK social care system is “at breaking point” as it struggles with rising demand and high costs.
It comes as thousands of care and support providers, and some of those who rely on the service, plan to stage a demonstration in central London to urge the government to give more support to the ailing sector.
The planned rise in National Insurance contributions for employers combined with the increase in the national minimum wage, set to come into effect in April, could lead to some providers going out of business, according to Providers Unite, a coalition of social care organisations campaigning for long-awaited social care reform.
Research by the independent think tank The Nuffield Trust estimates that the rises, announced by Chancellor Rachel Reeves last October, could cost the sector an extra £2.8bn a year.
Image: Rachel Reeves announcing the rise in NI contributions for employers in October
The government has already announced an additional £600m to help support the social care sector.
But the chair of the National Care Association, Nadra Ahmed, said the proposed increases will cancel out that government support.
“It is inconceivable that politicians fail to understand that a lack of investment will impact heavily on both the NHS and local government,” she said.
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“It is this lack of recognition or investment which has led to a watershed moment at a time when the need for our services continues to grow. The sector is at breaking point.”
Ms Ahmed said increased costs had not kept pace with funding levels and warned some care providers could end up bankrupt.
Jane Jones, owner of Applewood Support, a homecare provider in Nuneaton, Warwickshire, said her costs will rise by and estimated £6,000 a month when the National Insurance rise comes into force.
Image: Jane Jones, the owner of Applewood Support
“I felt sick when I heard the chancellor announce the rise in NI,” she told Sky News.
“It’s not feasible. I’ve had to make cuts in the office. We’ve got rid of two personnel because we just can’t afford it. It’s an attack on growth.”
The care sector employs nearly two million workers and supports more than 1.2 million people.
Pensioners Shiela and Paul Banbury have been married for 59 years and rely on Applewood to care for 82-year-old Sheila at home after she was diagnosed with Alzheimer’s in 2018.
Image: Sheila Banbury relies on carers to live with her husband Paul
Image: Paul Banbury
Paul, 77, says if they could not get home care Shelia would have to move into a care home.
“It would be very difficult after such a long time together. We want to be able to stay together in our home.”
Most care providers receive a fixed price for care, set by local councils. That means that rises elsewhere in the system are difficult to manage.
“We cannot increase our costs like the supermarkets can and are limited to what the government and councils can pay us,” says Ms Jones.
“So if they can’t pay us the right amount of money, we’re just going to go close our doors. And I think that’s what’s going to happen come April.”
Mike Padgham, chair of The Independent Care Group, urged the chancellor to review her budget measures and make care providers exempt from the National Insurance rise in the same way that the NHS is.
“We have suffered for more than 30 years and enough is enough. People who rely on social care and those who deliver it deserve better,” said Mr Padgham.
The government has published plans to reform the social care system, aiming to establish a National Care Service designed to bring it closer to the NHS.
Health and Social Care Secretary, Wes Streeting, announced the formation of an independent commission, chaired by Baroness Louise Casey, to develop comprehensive proposals for organising and funding social care.