September Jobs Numbers Come as Hot Labor Market Cools Some

The unemployment rate rose to 3.7% in August from 3.5% the preceding month as more workers entered the labor market. More workers could take pressure off wages—and inflation—as employers compete less to fill positions. Wages rose 5.2% in August from the same month a year earlier.

“We are seeing labor demand cool,” said

Sarah House,

senior economist at Wells Fargo. “But we have a long way to go towards restoring balance between supply and demand for labor.”

The number of job openings fell 10% in August to a seasonally adjusted 10.1 million from 11.2 million the month before, the Labor Department said Tuesday. The 1.1 million drop in openings is the largest decline since the early months of the Covid-19 pandemic in 2020. That left job openings at their lowest level in a year but still above their prepandemic level in 2019, when they averaged 7.2 million a month.

Economists surveyed by The Wall Street Journal estimated that employers added 275,000 jobs in September, down from 315,000 in August, and that the employment rate held steady at 3.7%. Such a payroll gain would still be robust but represent additional cooling of hiring from the monthly average of more than 440,000 during the first half of 2022.

It also would show progress towards the Federal Reserve’s goal of lowering demand for workers in an economy that has had an unemployment rate below 4% since February and inflation running close to a four-decade high.

The Fed is aggressively raising interest rates to rein in high inflation by slowing economic growth, including wage and job gains.

“In a market with more job openings than workers, the competition to fill vacancies is leading to rapid wage gains now, and the resulting salary compression may lead to further upward wage pressures in the future,” Fed governor

Philip Jefferson

said in a Tuesday speech.

A rise in the labor-force participation rate, which measures the percentage of working-age adults who are working or looking for work, could also ease the Fed’s fight, since more workers competing for jobs could cool wage growth and boost overall productivity. The participation rate rose to 62.4% in August from 62.1% in July, as participation among women ages 25 to 54 jumped to the highest level since 2000.

“Even in blue-collar segments, particularly manufacturing and logistics, we’re still seeing high demand and much higher levels of applications to those jobs,” said

Traci Fiatte,

who heads professional and commercial staffing for Randstad USA. “What that tells me is that manufacturing and logistics workers are interested in re-entering the workforce and also wage inflation is coming down.”

Layoffs have ticked up slightly in recent months but remain at historically low levels. Weekly jobless claims, a proxy for layoffs, have hovered for most of this year close to their prepandemic 2019 average of 218,000.

Many firms slowing hiring or laying off workers are in industries that are highly sensitive to interest-rate increases, such as technology and real estate. Some companies that saw a rise in demand earlier in the pandemic are also cutting back as consumer preferences shifted from goods to services.

Peloton Interactive Inc.,

said Thursday it plans to cut about 500 jobs, roughly 12% of its remaining workforce, in the exercise equipment company’s fourth round of layoffs this year. Other companies, from

Facebook

owner Meta Platforms Inc. to

Snap Inc.

and

Stanley Black & Decker Inc.,

are cutting jobs, while others including

Amazon.com Inc.

and

Alphabet Inc.’s

Google have said they would freeze or pull back on hiring.

At other businesses, demand for workers hasn’t eased. Laura Lee Blake, president and chief executive of the Asian American Hotel Owners Association, said that filling positions is a top concern among the 20,000 owners in the group. Difficulty in hiring has led some hotel owners to implement self-check-in kiosks, but some roles, such as cleaning rooms, don’t have an automated solution.

“One member had their parents come out of retirement to help cover some of the shifts simply because they didn’t have enough staff,” Ms. Blake said. “I have not heard any discussions about layoffs. It’s more about how they’re so desperate to find people.”

While the labor market remains tight, some workers continue using their leverage to win wage gains or better benefits ahead of a possible jobs slowdown.

Cassandra Wilander, a marketing professional in Chicago, said she changed jobs twice this year and experienced a shift in how hiring managers handled the process.

The first time, in January, she was able to find a job quickly and ask for a significant pay increase. The second time, this summer, the process took longer and she had to negotiate more for her salary after the initial offer came in lower than she had hoped.

Ms. Wilander, 36, had been frustrated with strict pandemic protocols at a former employer and in January took a new job at a small legal-marketing firm. The switch came with a $25,000 pay increase. But when that firm lost its access to downtown office space, Ms. Wilander decided she would try to hop again and left her job over the summer to look for new work.

She took a job in September as a communications specialist at a commercial real-estate company after the first real stretch of unemployment in her career: Employers took significantly longer to get back to her compared with her earlier search, she said. Still, the search paid off with a job she was happy to take.

“I know my worth, I know the value I bring,” Ms. Wilander said. “I’m a little unique in that respect, I don’t know that other people would be willing to hop like that.”

—Bryan Mena contributed to this article.

Write to Gabriel T. Rubin at [email protected]