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Job openings jump to 10.7 million despite Fed attempts to cool economy

Anticipating another interest rate hike
Federal Reserve expected to raise interest rates again this week 04:35

U.S. job openings rose unexpectedly in September, suggesting that the American labor market is not cooling as fast as the inflation fighters at the Federal Reserve hoped.

Employers posted 10.7 million job vacancies in September, up from 10.3 million in August, the Labor Department said Tuesday. Economists had expected the number of job openings to drop below 10 million for the first time since June 2021.

For the past two years, as the economy rebounded from 2020's COVID-19 recession, employers have complained they can't find enough workers. With so many jobs available, workers can afford to resign and seek employment that pays more or offers better perks or flexibility. Companies, meanwhile, have been forced to raise wages to attract and keep staff. Higher pay has contributed to inflation that has hit 40-year highs in 2022.

That's prompted the Federal Reserve to boost interest rates five times so far this year, with a sixth rate hike expected on November 2. The job opening data suggests that the job market in the U.S. is still tight, said Bill Adams, chief economist for Comerica Bank, in an email.

"The Fed was surprised by how long and how much inflation surged in late 2021 and 2022," Adams said. "They want to make sure that their next mistake does not come from underestimating inflation's intensity or persistence."

More job openings than unemployed workers

In another sign the labor market remains tight and employers are unwilling to let workers go, layoffs dropped in September to 1.3 million, fewest since April. But the number of people quitting their jobs slipped in September to just below 4.1 million, still high by historical standards.

"By all the key metrics in this report, the labor market is resilient,'' said Nick Bunker, head of economic research at the Indeed Hiring Lab. "Job openings still vastly outnumber unemployed workers, the quits rate remains elevated and layoffs are still well below pre-pandemic levels.''

Still, there are some signs of cooling within certain pockets of the labor market, according to Julia Pollak, chief economist at ZipRecruiter. Job openings in health care reached a record, but other industries are putting the brakes on hiring, she said.

"[E]lsewhere, the labor market is gradually cooling and returning to normal," Pollak said. "And in some industries, notably finance and insurance, the labor market is already in a deep freeze."

The central bank is aiming for a so-called soft landing — raising rates just enough to slow economic growth and bring inflation down without causing a recession.

Fed Chair Jerome Powell has expressed hope that inflationary pressure can be relieved by employers cutting job openings, not jobs.

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