Another clear signal of labor demand was last week’s release of the quarterly employment cost index which showed continued upward pressure on private wages to the tune of 1.2% quarter over quarter, still elevated from pre-pandemic levels. This is also driven by the fact that wages are not keeping up with inflation and the overall demand for labor.
In September, there were 806,000 open manufacturing jobs, according to Bureau of Labor Statistics data. This is nearly twice the 451,000-job average of the two previous years, before the pandemic.
Distortions in the labor market from COVID-19 are still present in the data meaning we will continue to have exceedingly tight hiring conditions and wage pressure in the sector. The Federal Reserve will likely continue to hike rates until they see a slowdown in hiring.
