US Job Openings Post Surprise Increase, Keeping Pressure on Federal Reserve to Maintain Rate Hikes

The number of available positions increased to 10.7 million in September from a revised 10.3 million a month earlier, the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) showed Tuesday. The median estimate in a Bloomberg survey of economists called for a drop to about 9.8 million.

The Surprising Pickup in Vacancies

The surprise pickup in vacancies highlights unrelenting demand for workers despite mounting economic headwinds. The persistent imbalance between labor supply and demand continues to underpin robust wage growth, adding to widespread price pressures and reinforcing expectations for yet another large rate hike on Wednesday.

"The latest increase in openings erased much of August’s slide, which, at the time, had suggested a notable moderation in labor demand," said Nick Bunker, head of economic research at Indeed Hiring Lab. "After the shock of last month’s report, the September JOLTS data is returning to a familiar story: demand for workers remains robust. By all the key metrics in this report, the labor market is resilient."

Key Takeaways from the Report

• The ratio of openings to unemployed persons rose in September. There are now some 1.9 available jobs for every unemployed person, compared with 1.7 in August.
• Fed officials watch that ratio closely and have pointed to the elevated number of job openings as a reason to why the central bank may be able to cool the labor market — and therefore inflation — without an ensuing surge in unemployment.
• Some 4.1 million Americans quit their jobs in September, a slight decline from a month earlier. The quits rate, a measure of voluntary job leavers as a share of total employment, held at 2.7 percent.
• Hires fell to about 6.1 million from 6.3 million a month earlier, suggesting businesses are having trouble filling open positions. Layoffs, meanwhile, edged lower.

Impact on the Federal Reserve

The surprise pickup in vacancies keeps pressure on the Federal Reserve to maintain its aggressive campaign to curb inflation. The central bank has been raising interest rates to combat rising prices and slow down the economy.

"The data precede Friday’s monthly jobs report, which is currently forecast to show U.S. employers added about 190,000 workers to payrolls in October," said Bloomberg.com. "Economists are expecting the unemployment rate to edge up to 3.6 percent, and for average hourly earnings to post another solid advance."

What’s Next for the Labor Market?

The labor market is expected to remain a key focus area for policymakers and investors as they navigate the current economic landscape.

"The acute labour shortages about to become chronic source of economic pain," said an editorial in Bloomberg. "Fed’s hawkishness casts doubt on Bank of Canada’s soft landing."

Conclusion

The surprise increase in job openings adds to the pressure on the Federal Reserve to maintain its aggressive campaign to curb inflation. The labor market remains a key focus area for policymakers and investors as they navigate the current economic landscape.

Recommended Reading

• Kevin Carmichael: Why Tiff Macklem is willing to risk a recession to crush inflation
• ‘Worst is yet to come’: IMF slashes growth outlook as recession risks grow
• Help Wanted: Acute labour shortages about to become chronic source of economic pain