The Kansas City Fed just released an under-the-radar labour market report, and it looks pretty good.
On Wednesday, the KC Fed released its latest Labour Market Conditions Indicators, a composite index comprised of 24 variables.
In August, the report’s activity indicator improved .08% from July, while the momentum indicator remains near historically high levels.
This is what the index looks like since the financial crisis.
Following the report, Chris Rupkey, chief financial economist at MUFG Union Bank, noted that the KC Fed’s report is among the 19 labour market indicators that the Fed tracks.
“Another day another Yellen dashboard indicator showing slack is receding,” Rupkey wrote in an email.
Rupkey said the report shows that, “Net net, the labour market is moving closer to the full employment finish line with today’s improvement in the Kansas City Fed’s Labour Market Conditions Indicators. Good news for the economy.”
As Rupkey sees it, this report also implies that the Fed might be closer to rate hikes than some expect, writing, “At Jackson Hole, Yellen talked about their index combining 19 different labour market indicators. Well, it looks like it is improving, and this moves the Fed closer to the finish line, and rate hikes. Bet on it.”
Earlier on Wednesday, we highlighted this chart from DoubleLine’s Jeff Gundlach that he argues shows why the Fed is in no hurry to raise interest rates.
We’re now just a week away from the Fed’s next monetary policy announcement, which will be accompanied by a press conference from Fed Chair Janet Yellen as well as an updated summary of economic projections from the FOMC.