The initial report of the United States (US) employment component data this week, JOLT'S, has surprised economic analysts.
According to the latest JOLTS data, the number of job opportunities available increased from 8.92 million in July to 9.61 million in August.
The increase reflects unexpected job demand, which has drawn attention to the strength of the US job market.
Although this is only one aspect of the larger job market, it provides a significant picture of current employment dynamics.
Federal Reserve
One of the biggest challenges for the Fed to determine monetary policy in the country is to look at and evaluate the labor market strength index.
The initial indication of the strengthening of job demand in the country is seen to give rise to concerns over the increase in the rate of inflation in the country.
In addition, the initial inflation data index that was published last week has shown an increase in the current inflation reading.
Continued strength in the job market is fueling concerns about rising inflation and potentially influencing the Federal Open Market Committee's (FOMC) decision on future interest rates.
An interesting aspect of this development is that although there is an increase in job offers, it is still above the level before the COVID-19 pandemic.
Therefore, the market may see another interest rate hike later this year.
This initial theory also depends on the NFP employment data report that will be published later Friday.
Current forecasts show an addition of around 170,000 jobs in September and a small drop in the unemployment rate.
But, the surge in the number of job openings in August shows that job demand is still high, and it has a positive effect on the labor market.
However, the challenges in the job market in the US are still there. Gaps in employee skills are often a problem, and this, along with modest wage growth, poses a challenge for employers.
The Fed will continue to monitor labor market data and other economic indicators to make decisions on monetary policy, which will provide an overview of the growing US economy.
