EXPLAINER-Charting the Fed's economic data flow

(Updates with latest inflation, jobs data)

Oct 11 (Reuters) - The U.S. central bank began an interest rate-cutting cycle in September, lowering short-term borrowing costs for the first time since the emergency reductions it implemented to support the economy during the COVID-19 pandemic.

After starting with an outsized half-percentage-point rate cut on Sept. 18, the debate has shifted to the likely size of the rate cut at its Nov. 6-7 meeting, immediately after the U.S.

presidential election

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Most Federal Reserve policymakers see inflation trending toward their 2% target, and their focus is increasingly on protecting the job market.

Here are the key statistics the Fed is watching in determining its next moves:

INFLATION (CPI released Oct. 10; next CPI release Nov. 13; next PCE release Oct. 31)

Increasing food costs lifted consumer prices a more-than-expected 0.2% in September from a month earlier.

Tempering the disappointment, however, was a deceleration in rent increases that appeared to deliver on long-deferred hopes for a softening in housing inflation. From a year earlier, the consumer price index rose 2.4%, the slowest pace in more than 3-1/2 years.

A day later, a report showed producer prices did not rise at all in September versus August, while on a year-over-year basis the measure of wholesale price inflation eased a tenth of a percentage point to 1.8%.

With PPI and CPI measures in hand, economists have set about estimating the personal consumption expenditures price index, which the Fed uses to set its 2% inflation target.

Their calculations point to a slightly stronger underlying measure of PCE, but a further tick down in overall, year-over-year PCE inflation to, by most estimates, 2.1%.

The conclusion: continued cooling in headline inflation, along with still-sticky core measures, likely leave the door open to a 25 basis-point Fed rate cut in November.

The official reading on PCE inflation won't come in until Oct. 31, less than a week before the Fed's meeting and during its customary communications blackout.

EMPLOYMENT (Released Oct. 4; next release Nov. 1):

Labor market conditions in September blew away expectations, with U.S. firms adding 254,000 jobs and the unemployment rate dropping back down to 4.1%. That pushed the three-month average total payroll growth up to 186,000, allaying fears that the labor market is deteriorating rapidly or that the economy is on the cusp of recession. The improvement prompted financial markets to exit from bets on another half-point interest-rate cut in November, in favor of a more-modest quarter-point cut.

Average hourly wages rose 4% in September compared with a year ago. The U.S. central bank generally considers wage growth in the range of 3.0%-3.5% as consistent with its inflation target, though many policymakers have said they feel wages are no longer contributing to the inflation problem given an overall cooling of labor markets.

JOB OPENINGS (Released Oct. 1; next release Oct. 29):

Most Fed officials in the last couple of months have turned their primary attention from inflation to the job market, which this summer began exhibiting clear signs of weakening.

Data showing job openings rose in August for the first time in three months may provide little comfort, as the U.S. Labor Department's Job Openings and Labor Turnover Survey (JOLTS) also showed hiring slid and the quits rate - a measure of how confident workers are about finding another job - dropped below 2% for the first time since June 2020.

Moreover, the ratio of vacant jobs to each unemployed person was just over 1.1-to-1, lower than its average in the 12 months preceding the pandemic.

Even so, Fed officials won't find much in the report signaling a sharp deterioration in conditions. The recent rise in the unemployment rate had largely been seen as a result of an increase in the size of the workforce, with outright job cuts remaining low. The JOLTS data showed layoffs declined to 1.608 million.

(Reporting by U.S. economics and Fed team; Editing by Paul Simao and Andrea Ricci)