In Beveridge curve, x-axis is the unemployment rate representing the attitude of the hired, and y-axis is job opening rate signaling the attitude of companies.
Since early 2000s, until financial crisis, each point was on a left side curve in below charts. Deteriorating economies caused lower job opening rate and higher unemployment rate with a cyclical factor drawn on the one, left side, line.
After financial crisis, however, the new, right hand, line had been drawn by higher unemployment rate with relatively high job opening rate. People said this a structural problem changed labor market map. The gap between these two lines means deteriorated potential for economy, so long-end bonds rates had been lowered although labor markets showed somewhat solid growth.
But, in July, JOLTS job opening rate year by year recorded the highest level since 2000s, even remaining on the current, right hand side, line. Moreover, as we know, unemployment rate in August slept further to 5.1% from 5.3% in July, pointing narrower spread between left and right lines, if we assume job opening rate holds in August.
In fact, as consider more factors about structural problems including work force or part time job ratio, we should draw this picture with U-6 unemployment which is focused by Ms. Yellen, the chairwoman of Fed. The pace of dropping U-6 unemployment rate is slower than (U-3) unemployment rate. In August, U-6 rate fell only 0.1%p from previous month, lower than U-3 rate with 0.2%p decline.
But I think the possibility that we maybe are on a inflection point about labor market with Beveridge curve. As we saw lower unemployment rate despite slower payroll gains in August, unemployment rate could fall further and more rapidly, even though job gains number hardly be accelerated.
Surely, I couldn't predict how the unemployment fall further.
But, this possibility of inflection point could push long-end interest rate higher with a rapid pace.
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