Friday, March 15, 2019

Record Job Openings In A Tight Labor Market

With today's release of the January Job Openings and Labor Turnover Survey (JOLTS), there is further confirmation that the job market remains tilted in favor of job seekers. As Econoday noted in their report, "employers are increasingly scrambling to fill [openings]." Even with new hires increasing by 1.5%, openings exceed hires by a record 1.78 million individuals.

A year ago with the  March 2018 data, job openings exceeded the number of unemployed looking for jobs for the first time since the JOLTS data has been available.

In looking at the data from the NFIB Small Business Optimism Index report also released earlier this week, items centered around employment are also top of mind for employers:
  • "57% reported hiring or trying to hire (up 1 point), but 49% reported few or no qualified applicants for the positions they were trying to fill."
  • "22% of owners cited the difficulty of finding qualified workers as their Single Most Important Business Problem, only 3 points below the record high."
  • Also matching a record high is the 10% of owners that cited cost of labor as their Single most Important Business Problem.
  • "Job creation broke the 45-year record in February with a net addition of 0.52 workers per firm (including those making no change in employment), up from 0.25 in December, and 0.33 in January. The previous record was 0.51 reached in May 1998."

The tight labor market is contributing to or benefiting wage growth. Average hourly earnings are up 3.5% on a year over year basis and have mostly outpaced inflation since 2012. The wage growth rate is approaching levels reached near the peak of prior economic cycles.

This labor market environment is certainly something the Fed is focused on.

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