An "unambiguous" cooling in jobs, per JOLTS

First, the good news: The Fed just got a big signal that its offense against inflation is bearing fruit.

Now, the bad: The number of job openings as measured by the Labor Department (JOLTS) plunged in August by over 1 million — well more than economists had forecast.

• In fact, the drop was the largest since April 2020 (the height of COVID-19 lockdowns, for those with short memories). Yet quits and layoffs were marginally changed, in keeping with the theme that jobs still remain plentiful.

Why it matters: Independent of the monthly payrolls data, JOLTS is one of a handful of reads giving insight into the health of the jobs market.

• With about two open jobs for every person seeking one, JOLTS has characterized an impossibly torrid labor market — an element of growth the Fed is looking to tame in the battle against price pressures.

What they're saying: "All we can say for sure is that this is the first official indicator to point unambiguously, if not necessarily reliably, to a clear slowing in labor demand," wrote Ian Shepherdson at Pantheon Macroeconomics.

• "If it continues over the next few months, and core inflation falls as much as we expect, the Fed will not be hiking by 125 [basis points] by the year end."
• The data is "the first clear sign of weakening labor demand [that] will pressure the Fed to do less, if it persists."