JOLTS Report Shows U.S. Job Openings Steady in September

Why It Matters: The Fed looks for signs of a soft landing.

The Federal Reserve closely monitors job openings to understand whether the economy is running too hot. Since March 2022, the Fed has tried to fight inflation by raising interest rates to their highest level since 2001.

The Fed has remained committed to hitting an annual inflation target of 2 percent without causing a significant spike in unemployment — a combined outcome known as a “soft landing.”

Fed officials are expected to maintain a target range of 5.25 to 5.5 percent for interest rates when they meet on Wednesday. The overall trend of slowing job openings is a sign that rate increases have cooled the economy, according to experts.

Job openings, which reached a record of more than 12 million in March 2022, have trended down, as has the job-quitting rate, while separations have been flat. As openings rose slightly in September, the number of openings per unemployed worker was flat, at 1.5, the same as August.

Less churn in the labor market indicates that rate increases are having an effect, said Julia Pollak, the chief economist at the job search website ZipRecruiter. ZipRecruiter’s latest survey of new employees found that the share of hires who received a pay increase, got a signing bonus or were recruited to their new jobs each fell.

Background: ‘More wood to chop’ for the Fed.

Job openings remain much higher than they were before the pandemic, and the number of unemployed workers per job opening is much lower. Both are signs of a tight labor market.

Inflation also remains above the Fed’s 2 percent target. The Fed’s preferred inflation measure has fallen nearly four percentage points since the summer of 2022, to 3.4 percent.

“The Fed’s primary focus remains inflation,” said Sarah House, a senior economist at Wells Fargo. “They’re reading the economy through the lens of ‘What does this mean for the path of inflation ahead?’”

According to Stephen Juneau, an economist at Bank of America, the Fed still has “more wood to chop.” His team expects that the Fed will raise rates one more time, in December, to reach a soft landing.

Economic growth in the third quarter accelerated, and another measure of wage growth grew faster than expected over the summer. The yield on the 10-year U.S. Treasury bond, a key measure of long-term borrowing costs that undergirds nearly everything in the economy, has reached its highest level since 2007 as the outlook for growth has improved.

What’s next: The October jobs report on Friday.

The report on Wednesday morning kicked off an important few days in economic news. After Fed officials meet to decide whether to raise rates, October’s jobs report will be released on Friday by the Labor Department.

The data is expected to show that hiring slowed, with the addition of 180,000 jobs, according to Bloomberg’s survey of economists, down from September’s 336,000. The unemployment rate is expected to tick up to 3.9 percent, after holding steady at 3.8 percent in September.