Investment Insights: How About a JOLT(S)?
12 September 2018
By Cliff Aque, CFA, Investment Strategist
Some investors may remember the buzz around Jolt Cola back in the late ‘80s/early ‘90s, which had “all the sugar and twice the caffeine” as a regular cola. It reminds us of today’s amped-up job market, as confirmed by the U.S.Bureau of Labor Statistics’ (BLS) latest Job Openings and Labor Turnover Survey (JOLTS) released on September 11. At the end of July, job openings remained at an all-time high of 6.9 million, which is higher than the number of people unemployed at 6.3 million in July and down to 6.2 in August.
In a recent Investment Insights: Where is Wage Growth? we discussed the tight labor market and how more people were quitting their job than ever before, but questioned why there had not been more pressure on wage growth. People are still quitting jobs at record levels, rising from 3.47 million to 3.58 million in July. More importantly, it looks like pressure is building for wage growth, which grew 2.9% year-over-year, up from last month’s 2.7%.
Another item from the BLS that points to further pressure on wage growth is the continued shrinking of the labor participation rate which declined by two tenths to 62.7%. With fewer people available for a larger number of jobs, employers will have to pay more to attract the best talent.
Wage growth does not seem to be bothering companies as small business optimism hit an all-time in the most recent report from the National Federation of Independent Business Small Business Economic Trends Report NFIB. A seasonally-adjusted 26% plan to create new jobs and 38% reported jobs they could not fill, both new highs. Of those trying to hire, 89% reported few or no qualified applicants, and a record-high 25% cited this as their single most important business problem. The balance of power finally appears to be shifting from employers to workers.
Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors. The opinions and views of third parties do not represent the opinions or views of Calamos Wealth Management LLC. Opinions referenced are as of the date of publication and are subject to change due to changes in the market, economic conditions or changes in the legal and/or regulatory environment and may not necessarily come to pass. This information is provided for informational purposes only and should not be considered tax, legal, or investment advice. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations.