Tuesday, 20 November, 2018

Private payrolls rise in October; wages surge in third quarter

U.S. Employment Costs Rise More Than Forecast as Pay Jumps Wages Rise 3.1 Percent, Fastest in a Decade
Nellie Chapman | 03 November, 2018, 18:25

Pay for USA workers increased 0.9 percent from July to September, bumping yearly earnings growth to the highest level since the 2008 recession.

Wages and salaries were up 2.9 percent in the 12 months through September.

Employment costs also rose in Q3, up 0.8 percent for the period, ahead of the estimate of 0.7 percent Wall Street economists projected, a sign that more inflation is ahead.

USA wages and salaries rose by the most in a decade while private sector payrolls increased by the most in 8 months in October, suggesting overall job growth accelerated this month after Hurricane Florence weighed on restaurant and retail employment in September. At the same time, the rate of hourly earnings growth in October was at 2.41 percent, rising for the second straight month.

A measure of compensation that includes benefits and covers all workers, including government employees, rose 2.8 percent in the third quarter from a year earlier, the Labor Department report said. The ECI is widely viewed by policymakers and economists as one of the better measures of labor market slack.

Employment gains have averaged 208,000 jobs per month this year, double the roughly 100,000 needed to keep up with growth in the working-age population. It is also considered a better predictor of core inflation. There were a record 7.1 million job openings in the economy in August, compared with only some 6.2 million unemployed. "Wage growth is likely to be over 3 percent again soon". Benefits grew 2.6 percent in the year ending in September, versus 2.4 percent in the prior year. In those years wages were only growing in a range of 2 percent to 2.5 percent a year, but inflation remained low.

"How hot is the labor market?" They were up 3.1 percent in the 12 months through September, the biggest increase since the second quarter of 2008.

"Wages are grinding higher as the labor market continues to tighten", said Justin Weidner, an economist at Deutsche Bank.

A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they can not find full-time employment, fell one-tenth of a percentage point to 7.4 percent, matching a 17-year low hit in August.

Employers also increased hours for workers last month.

The Fed is not expected to raise rates at its meeting next Wednesday, but economists believe strong labour market data could see the US central bank signal an increase in December. The Conference Board said its Consumer Confidence Index reached 137.9 this month, up from 135.3 in September.

The rise has some economists anxious higher inflation may not be far behind.

"It's not about the tax cuts". Construction and manufacturing added 17,000, respectively. The services sector did the most hiring, with the biggest expansion coming in trade, transportation, and utility companies. This article is strictly for informational purposes only.