Despite low unemployment, the number of job vacancies in the US rose unexpectedly in September. This will likely lead to more wage growth and pressure for the Federal Reserve to continue its aggressive campaign to stop inflation.
The number of open jobs rose from 10.3 million in August to 10.7 million in September. According to the Job Openings and Labor Turnover Survey (JOLTS) released Tuesday by the Labor Department. However, a Bloomberg survey of economists showed that the average prediction was for the number to drop to about 9.8 million.
As the Fed works to bring down stubbornly high inflation, this ratio has become more critical. When there are a lot of jobs but not enough workers, workers have the power to ask for a higher wage, which pushes up inflation.
From a revised 1.5 million layoffs in August to 1.3 million last month.
The unexpected rise in job openings shows that even though the economy is getting worse, workers are still constantly needed. The persistent imbalance between the number of people looking for jobs and the number of people available is still driving strong wage growth. This puts pressure on prices everywhere and makes it likely that the Fed will raise interest rates again on Wednesday.
The most recent rise in job openings erased much of August’s drop, which pointed to a significant slowdown in demand for workers.
Experts wades in
Nick Bunker, the head of economic research at Indeed’s Hiring Lab, said in a note that last month’s report was shocking. However, the September JOLTS data tells a familiar story: there is still a strong need for workers. Moreover, this report’s key metrics show that the job market is also vital.
After the news came out, the S&P 500 went down, and the yield on a two-year Treasury bond went up.
The most significant rises in job openings were in health care, transportation, warehousing, food and lodging services, and utilities.
According to Eliza Winger, job openings didn’t go down in September, despite clear signs that the economy was slowing down. So naturally, this made things harder for the Fed, which wanted to cool down the labor market.
What the number of job openings say
In September, there were more openings than unemployed people. As a result, there are now about 1.9 jobs available for every unemployed person, compared to 1.7 in August.
Fed officials keep a close eye on this ratio. They have pointed to the high number of job vacancies as a reason why the central bank may be able to cool the labor market. And, by extension, inflation without causing unemployment to rise.
In September, slightly fewer Americans quit their jobs than in August. However, the quits rate, the number of people that voluntarily quit their jobs as a percentage of total employment, stayed at 2.7%.
Hires dropped from 6.3 million a month earlier to about 6.1 million. Which suggests that businesses are having trouble filling open positions. Layoffs, on the other hand, went down slightly.
The data come before Friday’s monthly jobs report, which is expected to show that US employers hired about 190,000 new workers in October. Because of this, economists think that the unemployment rate will go up to 3.6%. And that average hourly earnings will increase by a solid amount.
Two labor markets
As a result of the global pandemic, more than 20 million jobs were lost, the recovery was slowed by virus outbreaks and health and safety precautions, a lot of people retired early, and some people haven’t been able to return to work because of problems in key support industries.
Read Also: US employers added 263,000 new jobs in September
Pollak said that the once-in-a-lifetime event is still causing the labor market to act in unusual ways.
In addition, the latest JOLTS report shows that there are two different kinds of labor markets. It says that industries like health care are still doing well. While industries affected by interest rates, like finance and insurance, have seen a significant drop in recent months.
