There are two important reports on the U.S. economy worth mentioning this morning First, the latest job openings and labor turnover survey (JOLTS) from the Bureau of Labor Statistics showed that there were 7.449 million job openings in America in April (lagged release). That was in line with estimates and little-changed from March’s downward-revised print. Total hires rose in April to 5.937 million, the best reading on record but still 25 percent below total vacancies, and total job openings have exceeded total hires for 52 consecutive months. We have argued that this will not last forever and already the annual rate of growth in vacancies has slowed considerably and converged with the pace of total hires.
The gap, though, is still very wide and consistent with an overall tight labor market where employers are having a difficult time finding suitable workers for the positions they are trying to fill. Moreover, the number of unemployed Americans per job opening ended April at 0.78, a new all-time low and the 14th straight month that total vacancies have exceeded total job seekers in this country. Job openings even outnumbered unemployed Americans by a record 1.6 million in April, and the ratio of quits to layoffs and discharges, an indicator of U.S. workers’ willingness to give up their current job security for better employment opportunities, held near the high-end of the historic range. Although supportive of wage growth and improved benefits offerings, this environment can also lead to greater consumer inflation as businesses try to pass on the rising cost of labor. Higher productivity growth, though, has helped keep inflation in check recently.
Elsewhere, small business owner confidence improved last month, according to a new report from the National Federation of Independent Business. Specifically, the headline optimism index ended May at 105.0, the highest reading since October and a sign that many domestic-focused small businesses have been able to weather the recent escalation in the trade war rather well. Six of the ten main components that make up the sentiment gauge improved in May, including marked gains in surveyed owners’ outlooks for the economy, real sales growth, and capital expenditures. As for employment conditions, small business job creation firmed in May and hiring plans rose to a 5-month high. At the same time, though, the percentage of owners complaining about a lack of qualified job applicants returned to record levels, and “quality of labor” was once again the top-cited problem facing small businesses. Unsurprisingly, reported plans to boost worker compensation in the months ahead jumped to the highest reading of 2019 as owners aim to better compete for talent in the tight labor market.
Sources: Econoday, U.S. DoL, NFIB, FRBSL
Post author: Charles Couch