Nearly half of small businesses that tried to fill jobs in the second quarter reported that they had few or zero qualified applicants for those positions, according to the June NFIB Small Business Optimism report.
On the heels of June's employment report, which showed jobs rose by 287,000 on the month, the details of the NFIB report should come as further relief for U.S. monetary policy makers, whose uncertainty about the state of the labor market skyrocketed following May's lackluster non-farm payrolls growth.
In the event that the jobs market continues to improve and inflation shows signs of rising back to its 2-percent target, Fed officials had said it would be appropriate to raise their benchmark interest rate twice before year end, according to the dot plot released in June.
The NFIB's report showed 29 percent of small businesses said they had job openings they were unable to fill, and 15 percent of owners surveyed said that finding quality labor was their single most-important business problem, which is almost the highest reading of this expansion.
Somewhat surprisingly, faced with this labor shortage, only a net 14 percent of owners indicated that they planned to hike employee pay, with the balance of opinion down slightly from May's report.
The Atlanta Fed's Wage Growth Tracker, however, suggests that a tightening labor market is incentivizing employers to raise wages. This measure has been on an upwards trend since October and hit new cycle highs in its most recent prints, with median pay growth quickening to 3.5 percent year-over-year in May.
In a recent note to clients, Deutsche Bank AG Chief International Economist Torsten Slok observed that the ratio of people who have indicated that they would like to work per job opening is already lower than during the depths reached during the housing boom:
The latest minutes from the Federal Reserve suggest that monetary policy makers who believe recent labor market statistics are pointing to an economy that's nearly at full employment are in a small minority.
However, elements of this NFIB Small Business Report, as well as the May Job Openings and Labor Turnover Survey, which is slated to be released at 10:00 am New York Time on Tuesday, are tentative evidence of a U.S. economy that's running out of readily available and qualified labor.