Last Friday, we were treated to a pretty stellar jobs report, which showed the unemployment rate dropping two-tenths of a percent along with a decrease in long-term unemployment and the number of discouraged workers (people who have given up looking for work).
On Tuesday morning, the Labor Department released its Job Openings and Labor Turnover Report, which measures the rate at which businesses are hiring, laborers are quitting, and the total number of job openings in the country. It’s a great companion to the jobs report, and one that Federal Reserve Chair Janet Yellen has said is an important gauge of the health of the labor market.
Tuesday’s report showed the total number of job openings increased again in May to 4.6 million, up from 4.5 million in April and 4.2 million in March. This means there are more jobs open per unemployed worker today than at any time in the past six years. Check out the following chart from University of Michigan economist Mark Perry, which shows the extent of the progress on this front, especially in the past few months.
People are also quitting their jobs at a 15% higher rate than they were at this time last year, which shows that workers are more confident that they’ll be able to find work again if they leave their jobs. While the quit rate remains well below pre-recession norms, you can see that the labor market has made progress:
All of this is great news for the Federal Reserve, which seems to be successfully stimulating the job market without stoking inflation. Furthermore, bond and stock markets have been quiet all year, shrugging off the slow taper of QE bond purchases with the help of assurance from Janet Yellen that the Fed will not raise interest rates anytime soon.
It also means that economy watchers should be on the lookout for rising wages. While wage growth remains tame—the latest jobs report showed a 2% growth in wages year-over-year—growing job openings and a falling unemployment rate will inevitably begin to put pressure on wages to rise at some point soon.