US labour market weaker than some indicators show, San Francisco Fed says

The state of the US labour market is worse than it might appear so policymakers should focus more on signals of weakness.

According to a research paper published by the Federal Reserve Bank of San Francisco, signals for the US labour market were diverging to an "unprecedented" degree.

Researchers based their findings on 26 indicators for the jobs market which were now giving contradictory readings instead of moving in tandem as they usually do.

For example, the current level of the jobs opening rate, appeared to show a 'tight' labour market but the labour force participation rate pointed to far greater slack than as per the unemployment rate.

The latter was a better reflection of the true state of the jobs market because so many Americans had been forced out of the labour force, the researchers concluded.

"Overall, our findings reveal that the labor market situation is worse than some headline numbers suggest."

The research paper was published on 31 May.