There are various measures that attempt to capture the health of the US jobs market including the unemployment rate, which comes from the Bureau of Labour Statistics’ monthly employment situation report.
David Rosenberg, chief economist and strategist at Gluskin Sheff, prefers a measure derived from the BLS’s JOLTS report, which recently showed that job openings jumped to 5.75 million in July, the highest since the series began in December 2000.
In a new note to clients, Rosenberg shared a chart showing that the ratio of unemployed job seekers to job openings has plunged significantly from its financial crisis peak.
In light of that, he suggests that this is great news for workers — and that wage acceleration should start soon.
Here’s the whole blurb from Rosenberg:
“The ratio of the unemployed to the level of job openings has decline to 1.43x, far below the near-7x peak at the worst part of the Great Recession and a place we have been at just two other times before (since the JOLTS data were first published.)
This may well be the most accurate measure of just how tight the labour market is — we are heading to an environment where we are down to one person competing for one job.
The sands have shifted towards this being a sellers’ market for labour.
Wage acceleration either starts real soon or we can simply take the laws of supply and demand and throw them in the dustbin.”
Check out that chart below.