US Hiring Likely Slowed Last Month 10/07 06:05
The piping-hot U.S. job market may be cooling off, if only slightly.
WASHINGTON (AP) -- The piping-hot U.S. job market may be cooling off, if
But what business managers, policymakers, investors and economists want to
know is this: How cool would be cool enough for the inflation fighters at the
Federal Reserve to begin to ease their aggressive interest rate hikes?
The government's jobs report for September, coming Friday morning, is
expected to show that employers added 250,000 jobs last month, according to a
survey of economists by the data firm FactSet. That would be the lowest monthly
gain since December 2020 and would mark a drop from an average of 438,000 from
January through August. Yet by any historical standard, it would still amount
to a healthy total.
Forecasters also expect the unemployment rate to stay at an extraordinarily
The Fed is engaged in an epic battle to rein in inflation, which was running
at a 40-year high in June and has eased only slightly since. The Fed has raised
its benchmark interest rate five times this year. It is aiming to slow economic
growth enough to reduce annual price increases back toward its 2% target.
It has a long way to go. In August, one key measure of year-over-year
inflation, the consumer price index, amounted to 8.3%.
Fed Chair Jerome Powell has warned bluntly that the inflation fight would
"bring some pain," notably in the form of layoffs and higher unemployment. Some
economists remain hopeful that despite the persistent inflation pressures, the
Fed will still manage to achieve a so-called soft landing: Slowing growth
enough to tame inflation, without going so far as to tip the economy into
It's a tricky task. And the Fed is trying to accomplish it at a perilous
time. The global economy, weakened by food shortages and surging energy prices
resulting from Russia's war against Ukraine, may be on the brink of recession.
Kristalina Georgieva, managing director of the International Monetary Fund,
warned Thursday that the IMF is downgrading its estimates for world economic
growth by $4 trillion through 2026 and that "things are more likely to get
worse before it gets better.''
Public anger over high prices and fear over the prospect of recession also
carry political consequences as President Joe Biden's Democratic Party
struggles to maintain control over Congress in November's midterm elections.
Meantime, the Fed is closely monitoring the job market. Many employers have
failed over the past couple of years to fill all the jobs they need, and
they've bid up wages to try to attract or keep workers. Those higher wages are
feeding inflation as companies raise prices to offset their higher labor costs.
Powell and his colleagues on the Fed's policymaking committee want to see
signs that the abundance of available jobs -- there are now 1.7 openings for
every unemployed American -- will steadily decline. Many economists viewed the
pace of hiring in August, when employers added 315,000 jobs, as a Goldilocks
achievement: Warm but not so warm as to alarm the Fed and force it to jack up
borrowing rates even more aggressively.
Some encouraging news came this week, when the Labor Department reported
that job openings fell by 1.1 million in August to 10.1 million, the fewest
since June 2021.
Nick Bunker, head of economic research at the Indeed Hiring Lab, suggested
that among the items on "the soft landing flight checklist'' is "a decline in
job openings without a spike in the unemployment rate, and that's what we've
seen the last few months."
On the other hand, by the standard of history, openings remain
extraordinarily high: In records dating to 2000, they had never topped 10
million in a month until last year.
"There are still 10.1 million jobs open,'' noted Michelle Reisdorf, who
oversees operations for the human resources consulting firm Robert Half in
Illinois and Indiana. "Candidates still have options. It's not like they have
one job to look at.''
Economist Daniel Zhou of the jobs website Glassdoor argued that a
single-minded focus on the job market might be overdone. Regardless of what
happens with jobs and wages, Zhou suggested, the Fed's policymakers won't
likely relent on their rate-hike campaign until they see proof that they're
actually hitting their target.
"They want to see inflation slowing down," he said.