The US Labour Market Looks Tight

On Friday we learned that the U.S. economy added 209,000 jobs in July. While this missed expectations it was still a solid report and shows that the U.S. job market continues to heal from financial crisis.

The unemployment rate climbed to 6.2% but is down from the 10% peak in 2009. There are 4.6 million job openings now, compared with 2 million in 2009

This chart from Deutsche Bank’s Torsten Slok shows the labour market continues to improve. There are 2 unemployed workers now for every job opening, compared to six in 2009.

The chart also shows that the labour market is getting tighter. “We are still not seeing broad-based wage pressure but it remains clear that a tighter labour market will eventually lead to higher wage inflation and ultimately higher consumer price inflation,” Slok told Business Insider.

“The question for the Fed and markets is when this will happen. I think the recent inflation and labour market data is strong enough for the Fed to turn hawkish in September.”

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