USA workers see highest wage growth since 2008

Contractors work on townhouses under construction in Milpitas California U.S. on Thursday Oct. 25 2018. MUST CREDIT Bloomberg

David Paul Morris Bloomberg News Contractors worked on town houses under construction in Milpitas Calif. last week. Unemployment is at a 49-year low

Economists polled by Reuters had forecast payrolls would increase by 190,000 jobs in October and the unemployment rate would be unchanged at 3.7 percent.

Wages and salaries have increased 2.9 percent on the year since September 2017, the fastest rate since September 2008.Total compensation costs for USA businesses rose 0.8 percent between July and September, with nonpay benefits rising 0.4 percent.

Strong annual wage growth mirrors other data published this week showing wages and salaries rising in the third quarter by the most since mid-2008.

The Labor Department's closely watched monthly employment report on Friday is also expected to show the unemployment rate steady at a 49-year low of 3.7 percent.

The Employment Cost Index, the broadest measure of labor costs, increased 0.8 percent in the third quarter, the Labor Department said.

Real income has been lagging behind economic growth for years. "Wage growth is likely to be over 3 percent again soon". Payrolls rose by 134,000 jobs in September, the smallest gain in a year, after Hurricane Florence drenched North and SC, weighing on restaurant and retail employment. In those years wages were only growing in a range of 2 percent to 2.5 percent a year, but inflation remained low.

"The strength in the ADP report supports our view that the underlying trend in the labor market remains upbeat", said Daniel Silver, an economist at JPMorgan in NY. They were up 2.6 percent in the 12 months through September after rising 2.9 percent in the year to June.

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Economists and investors expect the Fed to continue gradually raising interest rates, including a December increase that would be the year's fourth. They were up 2.6% in the 12 months through September after rising 2.9% in the year to June.

In the near term, private-sector employers will likely face even heavier pressure to increase compensations and benefits to compete for talent.

The Fed is not expected to raise rates at its policy meeting next week, but economists believe October's strong labor market data could see the USA central bank signal an increase in December.

The jobs market is viewed as being close to or at full employment. The Conference Board said its Consumer Confidence Index reached 137.9 this month, up from 135.3 in September.

Economists say his policies deserve some credit for triggering faster growth, but unemployment has been falling steadily for eight years and wages have been inching higher. That is seen supporting the economy through at least early 2019 when gross domestic product is expected to significantly slow as the stimulus from the White House's $1.5 trillion tax cut package fades. The services sector did the most hiring, with the biggest expansion coming in trade, transportation, and utility companies.

Manufacturing employment increased by 32,000 jobs in October after adding 18,000 positions in September. This article is strictly for informational purposes only.

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