Economy close to full employment as job vacancies hit record high

The economy is passing through a phase that is uniquely favorable for the employment market, with the highlights being record low unemployment rate and rising job vacancies. The Bureau of Labor Statistics brought more good news for American households Tuesday, when data from a recent survey revealed that overall job openings in the private sector climbed to a record high of 6.6 million in March.

The outcome of the survey challenges recent reports suggesting that employment growth is near saturation. Compared to February, a total of 472,000 more job vacancies were reported in March, with professional services, construction, transportation and utilities topping the list. The spike in vacancies has significantly narrowed the gap between the number of unemployed and available openings. The ratio has dropped steadily from its peak in 2009 to roughly 1:1.

A recent survey revealed that overall job openings in the private sector climbed to a record high of 6.6 million in March

During the month, the number of employees voluntarily quitting their jobs and taking up new ones rose by 136,000 sequentially to 3.34 million, and the increase was broad-based. The trend, which is reflective of the brightening sentiment among employees, could set the stage for faster wage growth in the long term.

Another positive factor is a sharp fall in layoff rates in March to an all-time low, which can be attributed to non-availability of the right kind of talent for the wages companies offer.

Meanwhile, an uptick in inflationary pressure, typically associated with income growth, might increase the chances of the Federal Reserve tightening its monetary stance further and hiking the key rate two more times this year. The lone factor that could hold back inflation is the muted wage growth.