This jobs market truly is one for the ages. I don’t know if people really get that.
So we got the jobs data last week, and I don’t think people really get how important this is.
Because when you have a jobs market that’s this tight for this long – when everyone who wants a job can find one – then it’s only a matter of time before wages increase.
Once wages increase, borrowing capacity goes up. Once borrowing capacity goes up across the board, people are able (and have to!) pay more for houses.
Once that happens, then house prices go up.
And what you have then is a wages booster engine strapped onto a rocket that’s already hurtling along with a super-cheap money booster engine and a rental-boom booster engine.
And from there, it’s next stop: moon.
But for now, all this is going under the radar. It’s all getting lost in the heat and noise of the election campaign.
And last week’s data didn’t get a lot of coverage because it showed that the unemployment rate was unchanged at 4.0%.
Never mind that this is one of the lowest unemployment rates in a generation. Never mind that we might never see an unemployment rate this good for a long, long time.
No, no change means no news.
And that meant it was a lost opportunity for the government. They would have loved a piece of data that said they had delivered the lowest unemployment rate in 50 years.
Not that they really had all that much to do with it. But have you ever known a politician to not take credit when credit was going?
So anyway, no bragging rights this month. But the government will get one more crack at the cherry. The next labour force data is due out 2 days before the election. It might end up being just the boost the government needs.
But when you look at it, the picture it paints of the economy and the jobs market is nothing short of phenomenal.
The unemployment rate is at historic lows, and we’re adding more and more jobs. Total employment is pretty much back on trend, after a bumpy couple of years.
And it’s a jobs market that’s inspiring a lot of people to get involved. The participation rate is booming and the employment to population ratio is the highest it’s ever been, on the back of a strong lift in female participation.
So it’s nothing but good news.
And looking forward, this labour market tightness looks set to continue. The number of job vacancies nationwide has exploded:
As a result, the ratio of unemployed people to the number of open vacancies has fallen to the lowest level… EVER.
That’s a picture of an incredibly tight labour market.
And from there, wages gains will follow as surely as night follows day.
And house prices after that.
That’s the real story here.
DB.