In September, the US unexpectedly saw a rise in job openings, despite low unemployment. This will likely lead to more wage growth and pressure for the Federal Reserve to keep up 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, or JOLTS, released on Tuesday. However, a Bloomberg economist survey showed that the most common prediction was for the number to drop to about 9.8 million.
This ratio has become more critical as the Fed tries to bring down the high inflation. When there are a lot of jobs but not enough workers, employees have the power to ask for a higher wage, which pushes up inflation.
Last month, there were 1.3 million layoffs, down from a revised 1.5 million in August.
Even though the economy is worsening, there is still a strong demand for workers, as shown by the sudden rise in job openings. Moreover, the persistent imbalance between the number of people looking for work and who can do the work is still driving strong wage growth. This puts pressure on prices everywhere and makes it more likely that the Fed will increase rates again on Wednesday.
The most recent rise in job openings erased a lot of August’s drop, which at the time pointed to a significant drop in job demand.
Economists weigh in on job openings
Nick Bunker, economic research head at Indeed Hiring Lab, said in a note that the report from last month was shocking. However, the September JOLTS data tells us what we already knew: the demand for workers is still strong. Moreover, this report’s necessary measures show that the job market is also vital.
After the news came out, the S&P 500 fell, and the yield on a two-year Treasury rose.
The most significant increases in job openings were in health care, transportation, warehousing, 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 wants to take some of the heat away from the labor market.
More numbers regarding September jobs
In September, the ratio of job openings to unemployed people went up. There are about 1.9 jobs 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 a rise in unemployment.
About 4.1 million Americans quit their jobs in September, slightly dropping from a month earlier. However, the quits rate, the number of people who voluntarily resigned from their jobs as a share of total employment, stayed at 2.7%.
Hires dropped to about 6.1 million from 6.3 million a month earlier, which suggests that businesses are having trouble filling open positions. Layoffs, meanwhile, went down a little.
The data come before Friday’s monthly jobs report, which is expected to show that US employers added about 190,000 workers to their payrolls in October. Because of this, economists expect the unemployment rate to go up to 3.6% and the average hourly wage to go up again by a solid amount.
A tale of two labor markets
The global pandemic caused more than 20 million jobs to be lost; the recovery slowed by virus outbreaks and health and safety precautions, a rise in early retirements, and the disruption of crucial support industries, which has kept some people from returning to work.
Pollak said that the once-in-a-lifetime event is still causing some unusual things to happen in the labor market.
Also, the latest JOLTS report shows two different kinds of job markets. For example, it says that industries like health care continue to grow. In contrast, rate-sensitive industries like finance and insurance have seen a significant drop in job openings in recent months.