From Deep in Winter, Signs of an Economic Spring
As job openings and business confidence increase, there are signs that the pace of hiring and wage growth could quicken in the coming months, says our senior research fellow, Bob Hughes.
On Tuesday, the Labor Department reported there were 5.43 million job openings in November, up slightly from October. It’s still below the peak of 5.67 million openings recorded in July, but it’s still at a high level, Hughes said. Within that number, private sector job openings followed largely the same pattern – up, but not quite at its peak.
Meanwhile, the National Federation of Independent Business reported on Tuesday that in December, a net 15 percent of its respondents – mainly small businesses – were planning to increase hiring, up from 11 percent in November.
That, Hughes said, put the survey back to levels that were “consistent with the heart of the previous expansion,” 2004-06. Furthermore, as small business hiring expands, medium and large-sized businesses tend to follow the same hiring trajectory, Hughes said.
“It may be a positive sign for hiring more broadly,” Hughes said.
With unemployment at 5 percent, more job openings could reasonably lead to upward pressure on wages, as well as further capital investment by businesses to help make existing employees more productive, he said. And more job openings, along with rising wages, could draw additional people into the labor market. Those workers would come from the pool of those people that, for whatever reason, are not currently looking for a job.
“Despite recent volatility in capital markets, the underlying labor market fundamentals look solid,” Hughes said.
