Jobs Slowdown May Finally Be Happening—So Then the Fed Can Back Off

Vacancies shrink and Friday’s employment report may aid the deceleration narrative.

How jobs are doing will be key to what the Federal Reserve does next. At the moment, it looks like job increases are slowing, which might lead the Fed to end its tightening campaign.

When Fed policymakers unveil their interest rate decision on Wednesday—not much suspense there, with most expecting another quarter-point boost—investors will mainly be focused on the organization’s future moves. Chair Jerome Powell’s news briefing likely will deal with what the central bank plans to do going forward in its bid to slow the economy and thus inflation.

The investors’ big preoccupations: How much more the central bank will increase rates and when it will stop?

How employment is faring is key to answering those vital questions. The consensus is that the nation’s robust job growth will finally decelerate to the creation of 170,000 new jobs in April, compared with 236,000 in March.

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news.

On Friday, the U.S. Bureau of Labor Statistics will report the April nonfarm results. Of course, Powell will already have made his appearance by then, but anticipation of what the BLS reports indicate surely will play into the Fed’s decisions. If, indeed, job growth comes in at 170,000, that will mark the first time the number has dipped below 200,000 since early 2020, the start of the pandemic.

Another job-related report, issued Tuesday by the BLS, suggested that employment growth is slowing. The Job Openings and Labor Turnover Survey showed that employment openings dropped in March, with vacancies totaling 9.59 million for the month, below February’s 9.97 million.

«