Labor Labor Market Results Despite Inflationary Cuts and Lowering the Rates of Interest Rates: The First Two Weeks of the Fed Budget
Job growth remained stubbornly robust in October despite higher interest rates, defying policymakers’ efforts to dampen the labor market and curb the fastest inflation in generations.
Employers added 261,000 jobs last month on a seasonally adjusted basis, the Labor Department said Friday. That was down from 315,000 in September. The unemployment rate rose to 3.7 percent.
Economists have been expecting the labor market to cool as higher interest rates make it more difficult for businesses to grow. The hiring has been remarkably stable, even as other areas of the economy have fallen.
The last snapshot of the economy before the elections next week will likely be used by both parties in their closing pitches to voters.
The Fed has been closely watching the labor market to determine if the efforts to control inflation by raising interest rates are working. They would like to see evidence that the labor market is soft but not so much that the economy goes into a recession.
On Wednesday, the Fed raised interest rates another three-quarters of a percentage point on and signaled plans to keep raising them even as it suggested that it might slow the pace of increases. Their next rate decision is scheduled for Dec. 14.
Labor Market Dynamics in the Light of the Great Resignation: Job Openings, Pay Increases, and Job Shop Ratios in November
The Bureau of Labor Statistics reported Wednesday that there were 10.5 million U.S. job openings on the last day of November, a figure little changed from the month before. The number of workers voluntarily quitting their jobs ticked up slightly, and layoffs were comparable to the previous month.
Julia Pollak, the chief economist with ZipRecruiter, said on her website that the robust number of job openings remained a testament to the resilience of demand for labor on Main Street.
There were still about 1.7 job openings for each job seeker in November, unchanged from October, according to data from the Bureau of Labor Statistics. The Federal Reserve closely monitors this ratio, since tightness in the labor market means employees have greater leverage to seek higher wages, which in turn drives up inflation.
The Great Resignation, as Pollak calls it, is not over as quits jumped to 4.2 million in November. They have averaged 2.6 million for the 18-month period after coming in at 3.4 million, up from last year’s 2.6 million average.
While that number is slightly lower than in previous months, it caps off an unusually strong year for the labor market — all the more so, given the Fed’s efforts to slow the economy in order to rein in demand and inflation.
Even though hiring problems continued to be a problem for employers, the labor market remained a key strength of the economy and households ahead of the holiday season.
When employees seek wage increases to cover rising prices, there will be a cycle in which fast inflation occurs tomorrow.
The Jolts release is a lagging indicator that tells more about recent conditions in the business cycle rather than about what will happen next. layoffs are predicted to increase and the economy to be worse with fewer job postings. Fortune 500 chief executives as well as small businesses lamented a lack of talent to fill openings in November.