The stock market hiccuped, and bond yields spiked on Friday after the latest jobs report showed that the Phillips curve is finally coming back to life as average hourly earnings spiked, rising by double the expected 0.2% M/M, and posting a 2.9% increase annually, the highest since the financial crisis.
This in turn has further entrenched the view that the Fed may be falling further behind the jobs and inflation curve – and will be forced to raise rates longer and higher than the market expects – as the US labor market is starting to overheat in earnest. Nowhere was this demonstrated more clearly than in the latest chartpack from Deutsche Bank’s Torsten Slok, who in over 100 slides of charts showed just how strong the US labor market has become.
Below we have excerpted some of the most notable observations and charts from the Deutsche Bank economist.
It currently takes 31 days to fill a vacant job, up from 23 days in 2006
Businesses are very worried about tight labor market
Much harder to fill a job today than in 2005-2006
Small business hiring plans at record high
Workers working part-time for economic reasons at pre-crisis levels
A broad-based pickup in wages in the pipeline. Wage cost measures above pre-crisis levels
Inflation theme not going away anytime soon
Wages trending higher across indicators
Wages trending higher
Average hourly earnings up both in goods and services sectors
Higher wage growth for job switchers than job stayers
Non-manager wage growth at post-crisis high
Labor market tighter now than in 2006 when the Fed funds rate was 5.25%
Almost 7mn job openings at the moment; was 2mn in 2009
More people voluntarily leaving their job is a leading indicator of wages
Leading indicators point to higher wages ahead
In 2010 there were 7 unemployed workers per job opening. Now it’s at 1
Total labor income strong – an important leading indicator of consumer spending
Getting closer to the terminal Fed funds rate? The Fed funds rate normally peaks when 80% of states have unemployment below the NAIRU
All jobs created since 2010 have been full-time jobs
Millennials have recovered completely from the financial crisis: Employment rate for people age 25-34 above pre-crisis average
Demographics dragging down employment to population growth
4mn people in the US are drivers
About half of the 4mn drivers in the US are truck drivers
This has been a recovery for people with education
The distribution of US employment
The distribution of employment by size and average hourly wages
Wage and income expectations among consumers elevated
Wage and income expectations among consumers elevated
Overtime hours up in August
Job openings trending up across sectors
Labor market slack declining across different measures
Unemployment duration still trending lower, we have reached full employment
Jobless claims at record lows
Short-term unemployment rate back to 2005 levels
Labor force participation rate marginally down to 62.7% in August
Fall in people not in the labor force who want a job
Disabled workers coming back into the labor market
Continued decline in the number of people on disability insurance. Likely the result of the very low unemployment rate
Despite opioid crisis and many on disability insurance many people outside the labor market are finding jobs
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