Key jobs reports this week could shape Fed interest rate path

Wall Street is watching two major employment reports this week that could influence how the Federal Reserve handles interest rates in the months ahead.

The U.S. will release its July report on job openings and turnover Tuesday, followed by the broader monthly jobs report for August on Friday. The Tuesday report breaks down openings by industry and tracks layoffs and quits. Friday's report covers job growth, unemployment and public sector employment across a wide range of industries.

The reports come after July's employment data showed the job market stalled unexpectedly. Employment had been one of the more resilient parts of the economy even as inflation continues to squeeze businesses and households and consumer confidence weakens.

A softening labor market would put the Federal Reserve in a difficult spot. The central bank has to balance fighting inflation with supporting employment, and its primary tool for that remains interest rates. Raising rates to combat inflation could further damage the jobs market, while cutting rates to support employment could make inflation worse.

The Fed has held rates steady as it monitors the impact of the U.S. conflict with Iran, which has pushed up crude oil prices and made gasoline and shipped goods more expensive. That pressure comes on top of an ongoing trade war that has raised costs on many goods.

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