Why it matters: Last major data release before the Fed rate decision.
The report released on Tuesday, called the Job Opportunities and Employment Turnover Survey, or JOLTS, is one of many the Fed watches closely each month to gauge its efforts to slow the economy and ease inflation without spurring widespread layoffs.
The Fed has been raising interest rates for more than a year as it tries to bring rapid inflation down to its 2 percent target. It will announce its next decision on Wednesday. Officials are widely expected to raise interest rates by a quarter of a percentage point, to just over 5 percent. The JOLTS report is the last major piece of data Fed policy makers will see before making a decision.
In particular, they are interested in the number of open jobs per available unemployed worker, which has been stubbornly high for several months. This mismatch has helped raise wages and contributed to inflation. Recently, however, the ratio has been declining, which is a welcome signal for the Federal Reserve confirming a gradual slowdown in the labor market.
Officials also track other details in the report, including the number of layoffs and workers who left their jobs.
BACKGROUND: Labor market flexibility complicates the Fed’s plan.
Month after month, the labor market has remained strong, defying expectations and complicating the Fed’s efforts to cool the economy. The latest evidence came on Friday, when government data showed that wages and salaries of private sector workers rose 5.1 percent in March from a year earlier, the same rate of growth in December.
However, high interest rates are negatively affecting the labor market, albeit gradually. Employers added 236,000 jobs in March, a healthy number but down from an average of 334,000 jobs added over the previous six months. Annual growth in average hourly earnings also fell to the slowest pace since July 2021.
What’s next: A big week for economic news.
The report on Tuesday kicked off a few big days for economic news.
In addition to the Fed’s decision on Wednesday, there will be a monthly Labor Department snapshot of the employment situation on Friday. The report, which is based on April data, will provide a clearer, more up-to-date picture of the labor market, including the change in the number of jobs — a number that’s been positive for 27 months in a row — and the unemployment rate.
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