US job openings jumped high in September

In September, US job openings rose suggesting that the demand for labour remained strong, which could temper financial market expectations that the United States Federal Reserve would dial back its aggressive interest rate rise in December.

With roughly 1.9 job openings for every unemployed worker at the end of September, wage growth could remain elevated. But the Fed’s fight against inflation received a major boost from an Institute for Supply Management (ISM) survey on Tuesday showing raw materials prices fell for the first time in 28 months in October.

The latest jobs data, which came in advance of a broader employment report from the US Bureau of Labor Statistics on Friday, is disappointing for investors who are looking for signs that inflation is easing and that the Fed might consider tempering its interest rate increases.

“That really fuels the expectation that the Fed has to do more hiking,” said Jason Draho, head of asset allocation for the Americas at UBS Global Wealth Management. “The labour market is still too tight for the Fed.”

The US central bank is expected to deliver another 0.75 percent rate increase on Wednesday as it fights to cool demand for labour and the overall economy to bring inflation down to its 2 percent target.

Wall Street is concerned that the central bank is being too aggressive in slowing the economy, running the risk that it could bring on a recession.

“The good news of more job openings for everyone will be bad news for everyone if Fed officials become convinced they need to push interest rates even higher and faster than before,” said Christopher Rupkey, chief economist at FWDBONDS, a financial markets research firm in New York. “It is a head-scratcher where you have to wonder whether 10 million job openings can stop a recession from coming.”

Job openings, a measure of labour demand, increased by 437,000 and brought the total number of job openings to 10.7 million by the last day of September, the US Department of Labor said in its monthly Job Openings and Labor Turnover Survey, or JOLTS report. Data for August was revised higher to show 10.3 million job openings instead of 10.1 million, as previously reported. 

Economists polled by Reuters had forecast 10 million vacancies. There were 215,000 more job openings in the accommodation and food services industries. Vacancies in healthcare and social assistance increased by 115,000, while the transportation, warehousing and utilities sector reported an additional 111,000 unfilled jobs.

But job openings decreased by 104,000 in wholesale trade. There were 83,000 fewer vacancies in the finance and insurance industry. The job openings rate increased to 6.5 percent from 6.3 percent in August. Hiring fell to 6.1 million from 6.3 million in August.

Hiring decreased by 57,000 in the durable goods manufacturing industry and fell by 40,000 in state and local government education.

Workers still quitting

About 4.1 million workers voluntarily quit their jobs, down from 4.2 million in August. The quits rate, viewed by policymakers and economists as a measure of job market confidence, was unchanged at 2.7 percent.

Layoffs dropped to 1.3 million from 1.5 million. Financial markets have been betting that the Fed would shift to a half-point rate rise at the December policy meeting.

The Fed has raised its benchmark overnight interest rate from near zero in March to the current range of 3 percent to 3.25 percent, the swiftest pace of policy tightening in a generation or more.