Job openings fell in March as the labor market continued to cool

Why it matters: The last big data release before the Fed’s rate decision.

The report released Tuesday, called the Job Openings and Labor Turnover Survey, or JOLTS, is one of many that the Federal Reserve monitors 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 data that Fed policymakers will see before their decision.

In particular, they are interested in the number of open jobs per available unemployed worker, which has remained stubbornly high for several months. That mismatch has helped drive up wages and contributed to inflation. Recently, however, the ratio has been declining, a welcome sign for the Fed that underscores the labor market’s gradual slowdown.

Officials also track other details in the report, including the number of layoffs and workers leaving their jobs.

The background: Labor market resilience complicates the Fed’s plan.

Month after month, the labor market has remained robust, defying expectations and complicating the Fed’s efforts to cool the economy. The latest evidence came on Friday, when government data showed wages and salaries for private sector workers rose 5.1 percent in March from a year earlier, the same growth rate as in December.

Nevertheless, higher interest rates take a toll on 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. Year-over-year growth in average hourly earnings also fell to the slowest pace since July 2021.

What’s next: A big week for financial news.

The report on Tuesday kicked off a big few days for economic news.

In addition to the Fed decision on Wednesday, there will be the Labor Department’s monthly snapshot of the employment situation on Friday. The report, based on data from April, will provide a clearer and more up-to-date picture of the labor market, including the change in the number of jobs – a figure that has been positive for 27 months in a row – and the unemployment rate.