The report pushed major U.S. markets higher because it is a potential sign that the Fed could slow its rapid pace of rate hikes, though most economists said that it would take more than one report to change the Fed’s trajectory.
That is good news for the Federal Reserve in its efforts to bring down high prices without plunging the economy into a recession. The government jobs report released Tuesday also showed that layoffs remained historically low, even after a modest increase in August. And overall hiring was essentially unchanged that month.
There were 10.1 million advertised jobs on the last day of August, the government said Tuesday, down a huge 10% from 11.2 million openings in July. In March, job openings hit a record of nearly 11.9 million. The report on job openings followed news that Australia’s central bank made an interest rate hike that was smaller than its previous increases, a rare sign of moderation as central bankers around the world rapidly boost rates to fight rising prices.
Chair Jerome Powell and other Fed officials hope that their interest rate hikes — the fastest in roughly four decades — will cause employers to slow their efforts to hire more people. Fewer job openings should reduce the pressure on companies to raise pay to attract and keep workers. Smaller pay raises, if sustained, could ease inflationary pressures.
Christopher Waller, a member of the central bank’s Board of Governors, has argued that the Fed’s rate hikes may be able to reduce job openings and therefore inflation pressures without causing widespread job losses. But former Treasury Secretary Larry Summers and former IMF chief economist Olivier Blanchard have written that such an outcome is unlikely, based on past trends. When job openings fall, layoffs and unemployment typically rise, they found.
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