Federal Reserve officials have indicated they’re waiting to see additional evidence that recent employment gains will prove durable before adjusting their policy stance. The bankers said on May 1 they plan to keep buying $85 billion of bonds per month to facilitate labor market progress and that they are prepared to raise or lower the pace as the economic outlook evolves.
In deciding “whether there has been a substantial improvement in the outlook for the labor market” that could change the central bank’s policy, Fed Vice Chairman Janet Yellen said she will monitor data beyond the figures provided by the government’s monthly employment report.
“Layoffs and discharges as a share of total employment have already returned to their pre-recession level, while the hiring rate remains depressed,” Yellen said during a March 4 speech. “Therefore, going forward, I would look for an increase in the rate of hiring.”
A pickup in the rate at which people quit their jobs will also provide a clue that the labor market is recovering, Yellen said. More workers leaving their position in search of another indicates they are confident about prospects and that demand for labor has strengthened, she said.
Companies that are hiring, such as Burlington Northern Santa Fe LLC, could change the picture for Yellen. Matt Rose, the railroad’s chief executive officer, said during a May 6 interview on Bloomberg Television that his company will increase its staff by about 1% this year to accommodate demand from increased energy production and consumer spending.
Another sign pointing to employment gains, advertisements for job openings posted online are also becoming more plentiful. The number of help-wanted ads rose in April to 5.1 million, reaching the highest level in records going back to 2005, according to data compiled by the Conference Board.
At the same time, economists project the pace of economic growth will cool this quarter, limiting employers’ need to hire. The nation’s gross domestic product will expand at a 1.5% annualized pace from April through June, down from a 2.5% rate in the prior three months, according to a Bloomberg survey from April 5 to April 9.
The slowdown comes as higher taxes pinch consumers, factories reduce inventory building and production and the government cuts back planned outlays.