US Fed notes softening labor market

WASHINGTON

The tight U.S. labor market is continuing to ease, the Federal Reserve announced on Oct. 18, underscoring the progress it is making as it seeks to tackle inflation while avoiding a recession.

The Fed has raised interest rates to a 22-year high as it looks to tame high inflation, which remains stuck above its long-term target of two percent.

Nevertheless, price increases have slowed sharply since last year, while the economy has remained resilient, raising hopes of a so-called "soft landing," in which inflation is quashed through rate hikes without causing a damaging recession.

In its regular summary of economic conditions published on Oct. 18, the Fed noted "little to no change in economic activity" since its last report, along with "modest" inflation and a softening in the labor market.

"Labor market tightness continued to ease across the nation," the Fed said in its report, known as the "beige book."

Several Fed districts reported an improvement in hiring and retention over the last few weeks, despite "ongoing challenges in recruiting and hiring skilled tradespeople."

"Those receiving offers have been less inclined to negotiate terms of employment," the report continued, noting that firms were mitigating higher labor costs by allowing more remote work, reducing sign-on bonuses, and "shifting compensation to more performance-based models."