There were two important reports on the U.S. economy released this morning. First, the latest job openings and labor turnover survey (JOLTS) from the Bureau of Labor Statistics showed that there were 6.939 million job openings in America in July (lagged release). That was much better than expected and a new all-time high. Most of the added vacancies in July were found in the finance and insurance (+46,000), and nondurable goods manufacturing (+32,000) arenas, while job openings fell in the retail trade (-85,000), educational services (-34,000), and federal government (-19,000) sectors. Despite the big gain in vacancies, total hires were essentially flat in July, which is consistent with firms continuing to expand their operations but having an increasingly difficult time filling positions due to a shortage of skilled workers. Moreover, the number of unemployed Americans per job opening fell back below 1.0 in July, and the ratio of quits to layoffs and discharges climbed to a record. Altogether, this report provided more evidence of a tight labor market that is enabling U.S. workers to give up their current job security for better employment opportunities. Although supportive of wage growth, this environment can also lead to higher consumer inflation as businesses try to pass on the rising cost of labor.
Elsewhere, small business owner confidence continued to improve last month, according to a new report from the National Federation of Independent Business. Specifically, the headline optimism index ended August at 108.8, better than expected and the highest reading in the 45-year history of this survey. Under the hood, six of the ten main components that make up the sentiment gauge strengthened last month and three deteriorated. Much of the strength in August was concentrated in owners’ reported plans to boost inventories and make capital outlays, while the weakness was related to slightly worse outlooks for sales growth, credit conditions, and the overall economy. As for job creation, total employment rose at a slower pace in August even as the number of vacancies and announced hiring plans lifted to record levels. Further, 89 percent of the surveyed small business owners who said that they were hiring complained about there being few or no qualified applicants for the positions they were trying to fill. Twenty-five percent of respondents also described the difficulty of finding qualified workers as their business's single most important problem, another all-time high. Altogether this report provided more evidence of the growing challenge that small businesses face when competing for talent in the tightening labor market.
Sources: Econoday, NFIB, U.S. DoL, FRBSL
Post author: Charles Couch