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

Why It Matters: The last major data release ahead of the Fed rate decision.

The report, released Tuesday, titled the Job Openings and Labor Turnover Survey, or JOLTS, is one of many the Federal Reserve monitors closely each month to gauge its efforts to slow the economy and lower inflation without stimulating widespread layoffs.

The Fed has been raising interest rates for more than a year in a bid to bring rapid inflation down to its 2 percent target. She will announce her next decision on Wednesday; Officials are widely expected to raise interest rates by a quarter of a point to just over 5 percent. The JOLTS report is the last big piece of data that Fed policymakers will see before making their decision.

She is particularly interested in the persistently high number of vacancies per available unemployed person for months. This mismatch has helped push up wages and contribute to inflation. More recently, however, the ratio has been falling, a welcome sign for the Fed that underscores the gradual weakening of the labor market.

Officials are also tracking other details in the report, including the number of layoffs and workers who quit their jobs.

The background: The resilience of the labor market is complicating the Fed’s plan.

Month after month, the labor market remained resilient, defying expectations and hampering 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 rate of growth as in December.

Nevertheless, the higher interest rates are weighing on the labor market, albeit gradually. Employers added 236,000 jobs in March, a healthy number but down from the average of 334,000 jobs added over the previous six months. Annual growth in average hourly wages also fell to the slowest pace since July 2021.

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

Tuesday’s report ushered in a couple of big days for business news.

Alongside Wednesday’s Fed decision, Friday will also see the Labor Department’s monthly jobs snapshot. The report, based on data from April, will provide a clearer and more up-to-date picture of the labor market, including changes in the number of jobs – a figure that has been positive for 27 straight months – and the unemployment rate.