[Pre-NFP] Scrutinize Early Indications of the US Labor Market

<p>&nbsp;The initial report of the United States (US) employment component data this week, JOLT'S, has surprised economic analysts.</p><p><br /></p><p>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.</p><p><br /></p><p>The increase reflects unexpected job demand, which has drawn attention to the strength of the US job market.</p><p><br /></p><p>Although this is only one aspect of the larger job market, it provides a significant picture of current employment dynamics.</p><p><br /></p><p>Federal Reserve</p><p><br /></p><p>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.</p><p><br /></p><p>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.</p><p><br /></p><p>In addition, the initial inflation data index that was published last week has shown an increase in the current inflation reading.</p><p><br /></p><p>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.</p><p><br /></p><p><br /></p><p>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.</p><p><br /></p><p>Therefore, the market may see another interest rate hike later this year.</p><p><br /></p><p>This initial theory also depends on the NFP employment data report that will be published later Friday.</p><p><br /></p><p>Current forecasts show an addition of around 170,000 jobs in September and a small drop in the unemployment rate.</p><p><br /></p><p>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.</p><p><br /></p><p>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.</p><p><br /></p><p>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.</p>