The US released positive job market data in July 2023. (Source: Medium)

The positive information was released by the US Department of Labor on August 29. This data gives hope to the US Federal Reserve (Fed) in being able to lower inflation without causing the unemployment rate to increase sharply.

The US Department of Labor’s Job Openings and Labor Turnover Survey (JOLTS) forecasts that 2.3% of nonfarm workers quit their jobs in July, the lowest figure since January 2021, when the Covid-19 pandemic was at its peak. Meanwhile, the hiring rate for the same month hit its lowest level since April 2020.

Commenting on the two data above, analysts assessed that labor demand in the world's largest power is decreasing and recruitment conditions are loosening, strengthening the necessary conditions for the Fed to achieve a "soft landing" scenario for the US economy.

Policymakers expect that the downward adjustment in inflation will not cause unemployment to rise further.

On the same day, the Conference Board released its own research data, confirming a general decline in consumer confidence.

Based on the data just released, markets now believe that the Fed will keep interest rates steady at 5.25-5.5% starting in September.

After its meeting on September 19-20, the US central bank will release new economic forecasts, providing a clearer view of the outlook for interest rates in the coming time.

However, the “surprising” strength of the US job market and strong wage growth continue to reinforce the argument that the world’s largest economy is not recovering as slowly as expected and there is still room to raise interest rates to curb inflation.

Currently, US inflation (after removing energy and food costs) is still more than double the Fed's 2% target.