US JOLTS Job Openings Expected to Resume Downward Trend in September

The US Job Openings and Labor Turnover Survey (JOLTS) data, set to be released on Tuesday by the US Bureau of Labor Statistics (BLS), is anticipated to show a slight decline in job openings for September. Market expectations suggest that job openings will retreat slightly below 8 million, following a brief uptick in August when the number climbed above 8 million from 7.7 million in the previous month.

The JOLTS data is closely watched by investors and Federal Reserve (Fed) policymakers as it provides crucial insights into the labor market’s supply-demand dynamics, which are key factors influencing salaries and inflation. The labor market has been cooling down since job openings peaked above 12 million in March 2022. The recent employment report for September, which showed an increase of 254,000 in Nonfarm Payrolls, has led market participants to adjust their expectations for future Fed rate cuts.

Fed policymakers, particularly after the July policy meeting, have emphasized their focus on the labor market as inflation shows signs of retreating towards the central bank’s target. Kansas City Fed President Jeffrey Schmid has noted that the labor market is normalizing after a period of record over-employment and low unemployment rates, rather than experiencing an outright deterioration.

The market currently anticipates a 25 basis points rate reduction at the next Fed policy meeting in November, with a 72% probability of another 25 basis points rate cut in December. The release of the JOLTS data could influence these expectations; a positive surprise could boost the US Dollar by reducing the likelihood of a December rate cut, while a disappointing print could have the opposite effect.

In addition to the JOLTS data, other significant economic indicators such as consumer confidence data for October will also be released on Tuesday. These reports will precede the October employment report due on Friday, which will provide further insights into the state of the labor market.