Job openings hit a more than 13-year-high yesterday. The rising number of job openings signals continued improvement in the labor market. Job openings are also up as a percentage of the unemployed. There is now a job opening for every two unemployed workers.
The higher number of openings signals that stronger wage growth may finally be on the horizon. My chart shows the ratio of job openings to unemployed workers versus the annual rate of change in the employment cost index. Job openings tend to lead wage growth by about six months. If we are to believe the signal being sent by the job openings ratio, look for wage growth to accelerate.
And if wage growth accelerates look for Yellen & Co., to change their tune on the Fed’s adventures in misguided monetary activism.