JOLTS Report Shows Potential Slackening in US Labor Market – Federal Reserve Concerned about Inflation
The US labor market may be slackening, according to the latest job openings and labor turnover survey (JOLTS) report from the Labor Department.[0] The report showed that the number of job openings in February had dropped to 9.9 million, the lowest since May 2021.[1] This suggests that labor market demand is slowing down, but experts argue that the market is still strong.[2] Although job openings declined, layoffs have also decreased, and quit rates have risen, indicating that employees are confident enough to leave their current job and find better employment opportunities.[3] This trend is most visible in southern states such as Florida, Texas, and Georgia, where workers are quitting in large numbers.
While the lower-than-expected figure indicates that there is still a demand for employees, the Federal Reserve is concerned that the tight job market may contribute to inflation.[2] Employers may feel pressure to raise wages to compete for workers, and then pass along price increases to consumers.[4] Federal Reserve officials have been raising interest rates aggressively in a bid to cool the job market and inflation more broadly, but job vacancies have been seesawing since last summer, with a slowdown one month followed by a pickup the next.[5] The February JOLTS report could signify a more enduring pullback.[6]
One of the labor market indicators that the Federal Reserve monitors is the JOLTS report. The Fed has raised interest rates nine times since March 2022 in its efforts to cool down the economy, which could potentially lead to layoffs and a higher unemployment rate.[1] Both of those effects would cool down the labor market, but so far, that hasn’t happened.[1]
Although JOLTS is considered a lagging indicator, the report contains useful information about the state of the US labor market. The job numbers from March will be released on Friday, and they will determine the Fed’s next move in dealing with this.[7] According to economists polled by Bloomberg, it is anticipated that around 240,000 jobs were added by employers during March. This marks a moderate decrease from February, yet still indicates a strong hiring rate, showcasing a thriving job market.[8]
0. “JOLTS Day Graphs: February 2023 Edition” Equitable Growth, 4 Apr. 2023, https://equitablegrowth.org/jolts-day-graphs-february-2023-edition
1. “Labor Department: Job Openings Declined in February | National News | messenger-inquirer.com” messenger-inquirer, 4 Apr. 2023, https://www.messenger-inquirer.com/news/national/labor-department-job-openings-declined-in-february/article_1b6fc9c1-c163-572f-8442-528597c39d27.html
2. “Job opening data shows signs of the ‘better balance' Powell, Fed have been seeking” AOL, 4 Apr. 2023, https://www.aol.com/job-opening-data-shows-signs-170515185.html
3. “Job openings tumble in February to lowest level in 2 years” Fox Business, 4 Apr. 2023, https://www.foxbusiness.com/economy/job-openings-tumble-february-lowest-level-years
4. “How ‘Fake’ Job Postings May Distort The U.S. JOLTS Report” Forbes, 4 Apr. 2023, https://www.forbes.com/sites/jackkelly/2023/04/04/how-fake-job-postings-may-distort-the-us-jolts-report/
5. “JOLTS report: Job openings fell to 21-month low while quitting rose” USA TODAY, 4 Apr. 2023, https://www.usatoday.com/story/money/2023/04/04/job-openings-jolts-data-openings-fell/11597277002/
6. “Job Openings Fall Below 10 Million in February, Well Below Expectations” U.S. News & World Report, 4 Apr. 2023, https://www.usnews.com/news/economy/articles/2023-04-04/job-openings-fall-below-10-million-in-february-well-below-expectations
7. “What does the dip in job openings mean for the economy?” NEWS10 ABC, 4 Apr. 2023, https://www.news10.com/news/what-does-the-dip-in-job-openings-mean-for-the-economy/
8. “Job openings fell in February as labor market’s slow cool-down continued” The Boston Globe, 4 Apr. 2023, https://www.bostonglobe.com/2023/04/04/business/job-openings-fell-february-labor-markets-slow-cool-down-continued/
