'I see a labour market that is looking hotter and hotter'

Deutsche Bank’s Torsten Sløk thinks the labour market is more than strong enough to justify interest rate hikes from the Federal Reserve

In an email on Wednesday, Sløk writes that he continues to talk to clients who don’t believe the US economy is anything other than weak, “not good,” or on the verge of recession. But the indicators Sløk is looking at show nothing of the sort. In fact, the opposite.

Last week, we highlighted charts from Sløk that showed, to him, an economy picking up steam.

On Wednesday, Sløk turned his focus to the labour market, writing that, “Based on these indicators I would argue that the labour market is already hot and if the Fed delays liftoff further the labour market will be overheated before we get to the neutral fed funds rate, which will only happen in 2017 at the earliest.”

The market, for its part, thinks the chances the Fed raises rates in September is about 30%.

In Sløk’s view, though, the Fed needs to act.

Here are the charts.

'The first chart below shows that it currently takes on average 27 days to fill a vacant job, up from 23 days in 2006.'

Deutsche Bank

'The second chart shows that the number of available people per job opening is now below its pre-crisis average.'

Deutsche Bank

'The third chart shows that there are now 1.5 unemployed workers per job opening, down from 6 in 2009.'

Deutsche Bank

'The fourth chart shows that according to the NFIB survey, companies are saying that it is currently harder to fill a vacant job than in 2005-2006.'

Deutsche Bank

'The fifth chart shows that labour shortage in the construction industry is now worse than in 2005.'

Deutsche Bank

'The sixth chart shows that in Texas we are now creating jobs in both the service sector and in the goods-producing sector; and total job growth is at the same level as before oil prices started falling.'

Deutsche Bank

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