There are a number of indicators, one of which is the labour market. You are right to mention this. Businesses are struggling to find enough workers to produce all the goods and provide all the services that households want to buy. But that is not the only factor.
Many elements of the economy are overheating. For example, businesses are also experiencing increases in input costs and are having to raise their prices faster than usual, leading to rapidly rising prices for consumers. Indeed, the effects are felt most strongly by consumers. This is an indicator that the economy is overheating. Companies can pass on cost increases to consumers because they are not able to meet all the demand.
These are two important factors, among others, that contribute to an overheating economy.