Demand for US workers rebounded in September in a sign of a tight labour market despite the Federal Reserve’s attempts to cool the economy down with a string of rate rises.
Employers added 437,000 job vacancies in September, bringing the total number of vacancies to 10.7mn at the end of the month, according to the labour department’s Job Openings and Labor Turnover Survey, commonly known as Jolts, which was released on Tuesday.
“The huge increase in job openings was expected to slow, but the numbers show a job market that is speeding up, not slowing down,” said Layla O’Kane, an economist for analytics company Lightcast.
The rise partly offsets a plunge in job vacancies recorded in August. Because job listings are seen as a proxy for labour demand, investors had interpreted the prior report as an early sign that the Fed’s plan to slow the labour market and cool inflation was working.
Officials had reported that vacancies in August fell more than 1mn to 10.05mn, but on Tuesday revised the total up to 10.3mn.
“Today’s Jolts release is not good: job openings up 437,000, the labour market remains very tight — a little tighter than we thought,” Jason Furman, a former economic adviser to Barack Obama who now works at Harvard, wrote on Twitter.
Furman added: “Most importantly this is a useful lesson in how not to read macro data — after last month’s premature hyperventilation.”
In September, healthcare employers posted a record high number of vacancies. The food service and transportation and warehousing sectors also helped fuel a jump in openings.
Released as the Fed gathered for its latest policy meeting, the data underscore just how tight the labour market remains despite efforts undertaken by the central bank since March to remove the stimulus it put in place at the onset of the coronavirus pandemic.
The data suggest the Fed will need to continue pressing ahead with plans to tighten monetary policy and keep interest rates at a level that restrains activity for an extended period in order to bring labour demand back into balance with the limited supply of workers.
Fed officials on Wednesday are set to raise the benchmark policy rate by 0.75 percentage points for the fourth time in a row, lifting the target range to between 3.75 per cent and 4 per cent.
At the last policy meeting in September, chair Jay Powell said rates were just at the “very lowest level of what might be restrictive”, indicating that the next move is expected to have a larger effect on growth.
Economists broadly think the Fed will need to raise rates to 5 per cent early next year if it is to return inflation to its 2 per cent target, a level that many predict will result in a recession and substantial job losses.
Prominent Democrats including Elizabeth Warren and Bernie Sanders have pressed the Fed to slow down before the economy reaches that point.
In a letter this week, Warren, Sanders and nine other lawmakers said the Fed’s actions showed “an apparent disregard for the livelihoods of millions of working Americans”.
“We are deeply concerned that your interest rate hikes risk slowing the economy to a crawl while failing to slow rising prices that continue to harm families,” they wrote on Monday.
In September, the last time projections were published, most Fed officials saw the unemployment rate peaking at 4.4 per cent. Economists warn that is far too optimistic and many believe it will eventually surpass 5 per cent.
Despite the jump in vacancies, the number of workers voluntarily leaving their jobs continued to edge lower, which economists view as a sign that jobseekers are losing confidence in the labour market. Some 4.1mn quit in September, down from 4.2mn the month before, according to labour department data.
“It’s still trending down overall, but not the consistent cooling the Fed was looking for,” said Nick Bunker, an economist for jobs site Indeed.
The labour department is scheduled to release its official payroll report on Friday.
Source: Economy - ft.com
