JOLTS job openings expected to ease in March before key employment report release
- The US JOLTS data will be watched closely ahead of the release of the April employment report on Friday.
- Job openings are forecast to edge lower to 7.5 million in March.
- The state of the labor market is a key factor for Fed officials when setting policy.
The Job Openings and Labor Turnover Survey (JOLTS) will be released on Tuesday by the United States (US) Bureau of Labor Statistics (BLS). The publication will provide data about the change in the number of job openings in March, alongside the number of layoffs and quits.
JOLTS data is scrutinized by market participants and Federal Reserve (Fed) policymakers because it can provide valuable insights into the supply-demand dynamics in the labor market, a key factor impacting salaries and inflation. Job openings have been declining steadily since reaching 12 million in March 2022, indicating a steady cooldown in labor market conditions. In January, the number of job openings came in above 7.7 million before declining below 7.6 million in February.
What to expect in the next JOLTS report?
Markets expect job openings to retreat to 7.5 million on the last business day of March. With the growing uncertainty surrounding the potential impact of US President Donald Trump’s trade policy on the economic and inflation outlook, Federal Reserve policymakers have been voicing their concerns over a cooldown in the labor market.
Minneapolis Fed President Neel Kashkari said last week that he is worried that businesses could start laying workers off because of the uncertainty caused by trade frictions. On a similar note, Fed Governor Christopher Waller told Bloomberg that he would not be surprised to see more layoffs and higher unemployment. “Easiest place to offset tariff costs is by cutting payrolls,” Waller explained.
It is important to note that the JOLTS report refers to the end of March, while the official Employment report, which will be released on Friday, measures data for April. Regardless of the lagging nature of the JOLTS data, a significant decline in the number of job openings could feed into fears over a weakening labor market. In this scenario, the US Dollar (USD) is likely to come under renewed selling pressure with the immediate reaction.
On the flip side, a sharp increase, with a reading above 8 million, could suggest that the labor market remains relatively stable. The CME FedWatch Tool shows that markets don’t expect the Fed to cut the policy rate at the next policy meeting in May, while pricing in a nearly 60% probability of a 25 basis points (bps) reduction in June. Hence, the market positioning suggests that a positive surprise could support the USD by causing investors to lean toward another policy hold after May.
When will the JOLTS report be released and how could it affect EUR/USD?
Job opening numbers will be published on Tuesday at 14:00 GMT. Eren Sengezer, European Session Lead Analyst at FXStreet, shares his technical outlook for EUR/USD:
“EUR/USD clings to a bullish stance but loses momentum, with the Relative Strength Index (RSI) indicator on the daily chart declining to the 60 region. On the downside, the Fibonacci 23.6% retracement of the February-May uptrend and the 20-day Simple Moving Average (SMA) forms a key support area at 1.1230-1.1200 ahead of 1.1050 (Fibonacci 38.% retracement) and 1.1000 (static level, round level).”
“Looking north, the first resistance level could be spotted at 1.1400 (static level) before 1.1500 (round level, static level) and 1.1575 (April 21 high).”
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
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