In its effort to combat the worst inflation in 40 years, the Fed quickly raised its key short-term interest rate to a range of 3% to 3.25%.

WASHINGTON – The number of available U.S. jobs fell sharply in August from July as businesses became less desperate for workers, a trend that may be cooling chronically high inflation.

This is good news for the Federal Reserve in its efforts reduce high prices without plunging the economy into recession. The government jobs report released on Tuesday also showed that layoffs remained historically low, even after a modest increase in August. And the total recruitment that month was practically unchanged.

Overall, the data suggests that even when companies take down job postings, they don’t lay off employees or put the brakes on job additions.

“Employers are thinking about who they don’t need to hire, but they’re not thinking about who they need to fire,” said Leila O’Kane, senior economist at workforce analytics firm Lightcast.

On the last day of August, 10.1 million job vacancies were announced, the government said on Tuesday, down a significant 10% from July’s 11.2 million openings. In March, the number of open vacancies reached a record – almost 11.9 million.

Report pushed the main US markets higher because it is a potential sign that the Fed may be slowing its rapid pace of rate hikes, although most economists said it would take more than one report to change the Fed’s trajectory. Important monthly employment data was released in the US on Friday.

Dow Jones industrial index added to his early achievements and jumped nearly 770 points, or 2.5%, in mid-morning trading.

The open job report followed this news Australia’s central bank raised interest rates to a lesser extent compared with the previous hike, a rare sign of moderation as central bankers around the world rapidly raise rates to combat rising prices.

In its efforts to combat the worst inflation in 40 years, the Fed quickly raised its key short-term interest rate to a range of 3% to 3.25%up sharply from almost zero as recently as March.

Federal Reserve officials hope to reduce demand for workers by raising rates, which increases the cost of mortgages, auto loans and business loans. While workers generally welcome bigger raises, the Fed considers the current pace of wage increases — about 6.5% a year, by some measures — to be unsustainably high and a key driver of inflation.

Chairman Jerome Powell and other Fed officials hope the interest rate hike – the fastest in four decades – will cause employers to slow their efforts to hire more people. Fewer vacancies should reduce pressure on companies to raise wages to attract and retain workers. Smaller wage increases, if sustained, could ease inflationary pressures.

“This helps reduce inflationary pressures and reassures the Fed that there may be a way out of this situation without a sharp increase in unemployment,” said Derek Tang, an economist at LHMeyer, an economic research firm.

Powell warned that the central bank will raise rates could lead to higher unemployment and potentially a recession. Still, he and other Fed officials are hoping for what they call a “soft landing” — one in which the economy slows enough to curb inflation but not enough to trigger a recession.

Christopher Waller, member of the Board of Governors of the central bank, argued that Fed rate hikes can reduce job vacancies and thus inflationary pressures without causing massive job losses. But former finance minister Larry Summers and former IMF chief economist Olivier Blanchard wrote that such an outcome is unlikely based on past trends. They found that when the number of jobs decreases, layoffs and unemployment generally increase.

For now, however, businesses are still hiring. Tuesday’s numbers come in the same week that the main jobs and unemployment report is due on Friday. Economists forecast it would show employers added 250,000 jobs in September and that the unemployment rate remained at 3.7% for the second straight month.

The job opening rate and the number of people quitting have declined in recent months, indicating some cooling in the labor market. Most people quit for another, usually higher paying, job. About 4.2 million people quit their jobs in August, still a high but below the record peak of 4.5 million last November.

San Francisco Fed President Mary Daly said last week that the decline in job vacancies and layoffs were “the first signs that the labor market is weakening.” But she added that the Fed would still need to see concrete evidence that inflation is falling before reversing interest rate hikes.