a scorching us jobs market caught a slight chill in august but the federal reserve aims to keep raising interest rates aggressively until demand for labor cools off a lot more there were some signs of cooling last month the number of new jobs created in august slipped to 315000 from a fivemonth high of 526000 in july and wages rose at the slowest pace in four months yet the appetite for labor is still extremely strong based on a key metric closely followed by the federal reserve the number of open jobs for every unemployed us worker in july there were two open jobs for every unemployed person based on figures from the bureau of labor statistics that matched a record high set in the early spring the number of open jobs in august won’t be available until the government’s next report in another month but it’s unlikely to show much change in july there were 112 million open jobs vs 57 million unemployed “this means continuing upward pressure on wages and prices well into 2023 a key reason that i believe that the fed still has quite a way to go before its tightening work is done” said chief economist stephen stanley of amherst pierpont securities the high demand for labor and a lack of available workers is largely what’s driven the biggest increase in wages in four decades workers have more bargaining power and they are using it hourly pay has risen at a 52 rate in the past 12 months more than double the average annual increase in the decade before the pandemic while higher wages have helped families cope with rising prices the fed is worried the increasing cost of labor will further fuel inflation and make it harder to bring down the yearly rate of inflation slipped to 85 in july from 91 but it’s still near a 40year high and well above prepandemic levels of less than 2 high inflation tends to be ruinous for economies if it becomes persistent the central bank rate hikes are aimed at slowing the economy and reducing business demand for labor to help alleviate inflation “so you have two job vacancies essentially for every person actively seeking a job and that has led to a real imbalance in wage negotiating” fed chairman jerome powell said earlier in the summer before the pandemic the ratio of open jobs to unemployed workers was around 12 compared to a record 20 in july either one of two things has to happen then the fed has to slow the economy enough through higher interest rates to discourage businesses from hiring quite as many people or more people have to enter the labor force in search of work to expand the pool of labor that would also ease the imbalance in bargaining power between companies and employees the bet among investors and economists is that a slower economy is most likely to do the trick what’s far from certain however is whether the fed can accomplish the goal without causing a recession