WASHINGTON– America’s employers slowed hiring in September but still added a solid 263,000 jobs – a dose of encouraging news that could mean the Federal Reserve’s efforts to cool the job market and ease inflation are beginning to make headway.
Friday’s government report showed that job growth fell last month from 315,000 in August and that the unemployment rate fell to 3.5% from 3.7%, a half-century low.
The slightly more moderate pace of hiring in September could be welcomed by the Fed, which is trying to slow the economy enough to tame the worst inflation in four decades without triggering a recession. Slower job growth would mean less pressure on employers to raise wages and pass those costs on to their customers through price hikes – a recipe for high inflation.
Public concerns about high prices and the prospect of a recession are also having political ramifications as President Joe Biden’s Democratic Party fights to maintain control of Congress in November’s midterm elections.
In its epic fight to contain inflation, the Fed has raised interest rates five times this year. The goal is to slow economic growth enough to bring annual price increases back down to the 2% target.
It is a long way. In August, a key measure of annual inflation, the consumer price index, was 8.3%. And for now, consumer spending – the main driver of the US economy – is showing some resilience. Consumers spent slightly more in August than in July, a sign that the economy was holding up despite rising lending rates, sharp swings in stock markets and inflated prices on groceries, rent and other basic necessities.
Fed Chair Jerome Powell has bluntly warned that fighting inflation “will bring some pain,” particularly in the form of layoffs and higher unemployment. Some economists remain hopeful that, despite ongoing inflationary pressures, the Fed will still be able to achieve what is known as a soft landing: slowing growth enough to tame inflation without going so far as to plunge the economy into recession.
It’s a notoriously difficult task. And the Fed is trying to do this at a dangerous time. The global economy, weakened by food shortages and rising energy prices as a result of Russia’s war with Ukraine, could be on the brink of recession. Kristalina Georgieva, chief executive of the International Monetary Fund, warned Thursday that the IMF is downgrading its estimates for global economic growth by $4 trillion through 2026 and that “things are likely to get worse before they get better.”
Powell and his colleagues on the Fed’s policymaking board want to see signs that the abundance of available jobs — currently there is an average of 1.7 open positions for every unemployed American — is steadily declining. Some encouraging news came this week when the Labor Department reported that job vacancies fell by 1.1 million to 10.1 million in August, the least since June 2021.
Nick Bunker, head of economic research at the Indeed Hiring Lab, suggested that among the items on the “soft-landing flight checklist” was “a drop in job vacancies without a rise in the unemployment rate,” and that’s exactly what we’ve seen in the last few Months.”
On the other hand, openings remain extraordinarily high by historical standards: in records dating back to 2000, they had never surpassed 10 million in a month until last year.
Economist Daniel Zhao of jobs website Glassdoor argued that a one-sided focus on the job market might be overkill. Regardless of what happens to jobs and wages, Zhao suggested, Fed policymakers are unlikely to back down on their rate hike campaign until they see evidence that they are actually hitting their target.
“They want inflation to slow down,” he said.
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https://6abc.com/september-jobs-report-unemployment-hiring-federal-reserve/12302652/ US hiring stayed solid in September as employers add 263,000