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Despite low unemployment, the total number of job openings in the US rose unexpectedly in September. This will likely lead to more wage growth and pressure for the Federal Reserve to keep up its aggressive campaign to stop inflation.
The Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS, showed on Tuesday that the number of open jobs went up from 10.3 million in August to 10.7 million in September. However, a Bloomberg poll of economists 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 inflation. When there are a lot of jobs but not enough people to fill them, employees have the power to ask for a higher wage, which pushes up inflation.
Last month, there were 1.3 million layoffs, down from 1.5 million in August.
Even though the economy is worsening, the unexpected rise in job openings shows that people will always need to work. Moreover, the persistent imbalance between the number of people looking for work and those who have jobs is still driving strong wage growth. This puts pressure on prices everywhere and makes it likely that the Fed will raise 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 demand for workers.
What economists said about US Job openings
Nick Bunker, head of research at the Indeed Hiring Lab, said in a note that last month’s report was shocking. However, the September JOLTS data show what we already knew: there is still a strong need for workers. Also, all of the key metrics in this report show that the job market is strong.
The S&P 500 fell after the news came out, and the yield on a two-year Treasury bond went up.
The most significant rises in job openings were in health care, transportation, warehousing, and utilities, as well as in hotels and restaurants.
Eliza Winger says that job openings didn’t go down in September, despite clear signs that the economy was slowing down. This made things harder for the Fed, which was trying to cool down the labor market.
More job openings statistics
In September, there were more job openings than unemployed people. There are now about 1.9 jobs for every person who is unemployed, up from 1.7 in August.
Fed officials keep a close eye on this ratio. They have said that the high number of job openings is one reason the central bank may be able to calm the labor market and, by extension, inflation without causing unemployment to rise.
In September, slightly less than the month before, about 4.1 million Americans quit their jobs. The quits rate, which shows how many people left their jobs independently, stayed at 2.7%.
Hires dropped from about 6.3 million a month earlier to about 6.1 million, which shows that businesses are having trouble filling open jobs. Meanwhile, layoffs went down a little bit.
The information comes before Friday’s monthly jobs report, which is expected to show that US employers hired about 190,000 more people in October. Because of this, economists think that the unemployment rate will go up to 3.6% and that the average hourly wage will go up again by a solid amount.
A story of two job markets
Because of the global pandemic, more than 20 million jobs were lost, the recovery was slowed by virus outbreaks and health and safety precautions, many people retired early, and essential support industries broke down, making it hard for some people to return to work.
Read Also: US employers added 263,000 new jobs
Pollak said that the once-in-a-lifetime event still affects how the job market works.
In addition, the latest JOLTS report shows that there are two different kinds of job markets. It says that industries like health care are still doing well, while rate-sensitive industries like finance and insurance have seen a significant drop in job openings in recent months.