Job openings are outpacing hirings by more than 3.2 million as the hunt for potential workers intensifies. Labour supply should gradually improve, but with demand looking so strong the upward pressure on worker compensation is set to continue – thereby adding to inflation pressures in the economy, economists at ING report.
The desperate hunt for US workers continues
“Evidence suggests there has been a significant increase in the number of people retiring over and above what would be expected from demographics. Some estimates suggest a figure of nearly 2 million more people.”
“Surging equity markets have boosted the value of 401k plans and after not having to commute to work for 16 months the desire to return to the office may not be what it once was. With so many people potentially having permanently left the labour force, this could mean the struggle to find workers could be more persistent.”
“With companies desperate to recruit and expand to take advantage of the reopening and the stimulus-fuelled growth environment, companies are increasingly taking the decision to pay more to attract staff.”
“This is further bad news for US companies with the implication being that companies not only have to pay more to recruit new staff, but also perhaps raise pay more broadly in order to retain staff. If this is the case then this will be a key story that keeps inflation higher for longer and could trigger earlier Federal Reserve interest rate increases.”
View more information: https://www.fxstreet.com/news/us-huge-excess-demand-for-workers-to-lead-to-more-persistent-inflation-ing-202107080641