MNI BRIEF: US Job Market Tighter Than Stats Show - Dallas Fed

The U.S. labor market is tighter than official employment data suggests, the Dallas Fed said Thursday, and April's disappointing jobs report likely reflects an elevated number of individuals sitting out of the workforce rather than weak demand for labor or limited employment opportunities. Other metrics, like job openings and wage data, suggest the labor market is well on its way to recovery, and "policymakers should be cognizant of a range of supply factors that may currently be weighing on employment," the Dallas Fed added.

Factors keeping unemployed workers at home, like childcare issues, lingering health concerns, enhanced unemployment benefits, and early retirements, will fade in the coming months, which could reduce labor market tightness, though it's also possible that labor supply will increase less than expected.

"It is our view that this possibility should be kept in mind as policymakers assess the appropriate stance of monetary policy," Dallas Fed researchers, including Fed President Robert Kaplan, wrote.