Author: David Templeton, CFA, Principal & Portfolio Manager, HORAN
In both the Job Openings and Labor Turnover Survey and the NFIB Small Business Optimism reports released this morning, it is clear that companies are having a difficult time filling open job positions. As the below chart shows, a record 8.1 million job openings were reported, a record since inception of the data in 2000. Another unique occurrence developing is the fact the job market is nearing a point where job openings will exceed the number individuals looking for employment (blue line in below chart.) The issue with this crossover in openings being greater than the number of unemployed is the fact it is occurring at a high level of unemployed individuals.
In the April NFIB Small Business Optimism Index report released this morning as well, a record 44% of surveyed businesses noted they had one or more jobs that could not be filled. Additionally, 21% of firms, higher than the pre-pandemic level, indicated they plan on increasing employment.
And finally, the overall Small Business Optimism Index rose 1.6 points to 99.8. The optimism level remains below the pre-pandemic high of 108.8 reached in August of 2018. This lower level of optimism is likely being influenced by the inability of firms to grow revenue due to this labor issue. Noted in the NFIB report:
"Small business owners are seeing a growth in sales but are stunted by not having enough workers,” said NFIB Chief Economist Bill Dunkelberg. “Finding qualified employees remains the biggest challenge for small businesses and is slowing economic growth. Owners are raising compensation, offering bonuses and benefits to attract the right employees.”
The economy is on the mend and pent up demand seems to be significant as I have noted in earlier reports and one recent one, Hard Economic Data Suggests A Continued Strengthening Of The Economy. It seems the enhanced unemployment benefit programs might be contributing to this labor tightness issue. The sooner the economy can get beyond this, the sooner the economy can grow at its potential.
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