Fresh data shows U.S. jobs market tightening

WASHINGTON Tue Aug 12, 2014 12:41pm EDT

A man walks past job seekers as they fill out job applications for recruiters during a job fair in New York, June 11, 2013. REUTERS/Lucas Jackson

A man walks past job seekers as they fill out job applications for recruiters during a job fair in New York, June 11, 2013.

Credit: Reuters/Lucas Jackson

WASHINGTON (Reuters) - The share of unemployed Americans competing for each open job hit a six-year low in June, suggesting a labor market tightening that could give way to faster wage growth.

The Labor Department's monthly Job Openings and Labor Turnover Survey released on Tuesday gave an upbeat assessment of the job market that could sharpen the debate on the timing of the first interest rate increase from the Federal Reserve.

The number of unemployed job seekers per open job fell to 2.02 in June, the lowest level since April 2008. The ratio was at 2.14 in May and is now below the average from 2002 to 2006.

"It reflects a jobs backdrop that continues to tighten on the supply side. There is not enough qualified supply out there to fill the job openings that exists," said Jacob Oubina, a senior U.S. Economist at RBC Capital Markets in New York.

Job openings, a measure of labor demand, increased to a seasonally adjusted 4.67 million in June, the highest level since February 2001.

At the same time, hiring reached its highest point since February 2008. Much of the increase in employment growth since the 2007-2009 recession ended had been driven by a sharp decline in the pace of layoffs, as opposed to a higher rate of hiring.

Now, in a bright sign for employment prospects, the economy appears to be passing the baton to the hiring side.

The so-called JOLTS report is one of the indicators being closely watched by Fed Chair Janet Yellen and other policymakers at the U.S. central bank as they contemplate the future course of monetary policy.

The Fed has signaled it is in no hurry to lift benchmark interest rates, currently near zero, because of still-ample labor market slack, evident in sluggish wage growth and large pools of long-term unemployed and Americans who are working only part-time even though they want full-time work.

Some economists, however, disagree.

"There is little slack remaining in labor markets, and wage growth will pick up more quickly than it did at similar levels of the unemployment rate in past cycles," said Michael Gapen, a senior economist at Barclays in New York.

Job growth has topped 200,000 in each of the past six months, a stretch last seen in 1997. The unemployment rate has declined to 6.2 percent from 6.7 percent at the end of 2013.

The rapid decline in the jobless rate has intensified the debate over when rates should rise, with a number of regional Fed bank officials arguing for sooner rather than later.

Troy Davig, the head of research at the Kansas City Federal Reserve Bank, told Reuters on Monday that rising job openings suggested earnings growth was poised to move higher.

"Faster wage growth certainly seems in the pipeline," he said. "The labor market appears to be hitting a turning point."

Dallas Fed analyst Alan Armen, in a research articled dated Friday, forecast a half-percentage-point rise in wage growth, citing a survey from the National Federation of Independent Businesses showing small businesses increasingly planning to raise pay in the coming year.

An NFIB survey released on Tuesday showed its compensation gauge held at a six-year high in July.

(Additional reporting by Ann Saphir in San Francisco; Editing by Jonathan Oatis)

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Comments (25)
gcf1965 wrote:
I see positions in my region that are posted as job vacancies, unfortunately, many are remaining posted for 6-8 months and more. Unfilled positions/job openings does not mean increased hiring or strengthening job market.

Aug 12, 2014 10:55am EDT  --  Report as abuse
AlkalineState wrote:
Hiring at 13-year high. Republicans vow to reverse this good news if elected to anything important again.

I think we’re safe.

Aug 12, 2014 11:31am EDT  --  Report as abuse
kolbe wrote:
It is also campaign season for our lovely congressional candidates here in the USA. With only three months remaining, constituents on both sides of the aisle have to make it appear like there are more jobs in order to boost morale in favor of their choice candidates. No worries, the losers will close the job reqs shortly after the elections.

Aug 12, 2014 11:34am EDT  --  Report as abuse
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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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