The number of job openings in the U.S. increased to 10.7 million in September, reversing a sharp decline in August and scuttling hopes that recent Federal Reserve rate hikes would help cool the American labor market. 
The data comes as markets brace for another rate hike on Wednesday. While a 75 basis-point hike is expected, some market participants are hoping the Fed will signal moderation at future meetings in response to concerns that the global economy is hurtling toward recession. Others argue recent data such as the uptick in job openings decreases the odds that the Fed will soften its stance any time soon 
"The market seems hopeful that the Fed will at least indicate a slowdown in the pace of hikes, but we're expecting it to be a pretty balanced message from [Fed Chair Jerome Powel], with respect to not wanting to prematurely signal anything that would be considered a pivot," Scott Duba, chief information officer and managing director at Prime Capital Investment Advisors, told Cheddar News. "There's not a lot of clear indication that the inflationary pressures are moderating."
The consumer price index ticked up 0.4 percent in September from the month before and 8.2 percent year-over-year. This is down from a recent peak of 9.1 percent in June, but remains near a 40-year high, and price gains are increasingly widespread. 
Mark Hamrick, senior economic analyst at Bankrate, said the latest job openings data presents a "good news/bad news conundrum" for the U.S. economy. 
"The high number of openings continues to underscore the huge divide between supply and demand for labor, contrary to what the Federal Reserve wants to see as it battles inflation," he said. "On the other hand, labor market strength bolsters job security, a positive for workers and those aspiring to work."
These arguments depend, however, on accepting the Fed's contention that the tight labor market is helping fuel inflation, along with other factors. As Powell put it back in August, "Reducing inflation is likely to require a sustained period of below-trend growth. Moreover, there will very likely be some softening of labor market conditions." 
Employ America, a progressive think tank, has pushed back against the correlation between employment and inflation — and in particular the Fed's use of the  vacancy-to-unemployment ratio (VUR) as a benchmark for tightness. 
The organization pointed out that VUR was historically low in the lead-up to the pandemic as well, but it did not come with high levels of inflation. 
"Given the stakes and the thinness of the evidence, the Federal Reserve is unnecessarily risking the well-being and livelihoods of millions of Americans by charting a path to take the economy into a recession," the group wrote. "It would be more appropriate to be cautious with the pace of rate increases; instead of engineering higher unemployment, a better and more prudent path can be pursued."
As usual, investors and economists will be listening closely to Powell's post FOMC meeting speech on Wednesday for signs of what the Fed will do going forward, and what specific metrics it will be tracking to gauge success.