Published: Sat, November 03, 2018
Markets | By Otis Pena

Wages Highest In 10 Years, Unemployment Remains Level Before Friday’s Jobs Release

Wages Highest In 10 Years, Unemployment Remains Level Before Friday’s Jobs Release

The jobs market is viewed as being close to or at full employment, with the unemployment rate at a near 49-year low of 3.7 percent. Wages and salaries, which account for about 70% of total compensation, rose 3.1% from a year earlier for private-sector workers.

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. Wages and salaries make up roughly 70 percent of compensation costs for US firms, while nonpay benefits take the other 30 percent.Wage growth slowed substantially after the great recession and has lagged behind the massive growth in U.S.jobs and equity markets throughout the recovery.

The smallest wage growth, 1.6 percent, was in natural resources, construction, and maintenance jobs.

USA labor costs accelerated in the third quarter as wages for both private and government workers surged amid tightening labor market conditions, Reuters reports. They were up 3.1% in the 12 months through September, the biggest increase since Q-2 of Y 2008.

Americans boosted their spending by the most in almost four years in the July-September quarter.

The ADP national employment report showed private sector employment rose by 227,000 jobs last month, beating economists' expectations for an increase of 189,000.

"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. He added that the gains are a "testimonial to the robust employment picture is the broad-based gains in jobs across industries".

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Prices also have been rising in the past year, especially for gas and rent, but wages are outpacing inflation by a significant margin.

"How hot is the labor market?"

But acceleration in employment growth likely was tempered by Hurricane Michael, which struck Florida in mid-October.

Economists and investors expect the Fed to continue gradually raising interest rates, including a December increase that would be the year's fourth.

Economists polled by Reuters had forecast the ECI rising 0.7 percent in the July-September quarter.

State- and local-government employees' compensation increased 0.8% on the quarter and was up 2.5% from a year earlier. They were up 3.1 percent in the 12 months through September, the biggest increase since the second quarter of 2008. This article is strictly for informational purposes only.

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