Economy

U.S. Employment Costs Rise More Than Forecast as Pay Jumps

U.S. Employment Costs Rise More Than Forecast as Pay Jumps”

According to a Reuters survey of economists, NFPs may have rebounded by 190,000 jobs in October after Florence depressed restaurant and retail payrolls in September.

The surge in wages lifted the Employment Cost Index, the broadest measure of labor costs, which increased 0.8 percent in the third quarter after rising 0.6 percent in the second quarter.

Wages and salaries rose 0.9%, and benefit costs - which include health coverage, retirement benefits and paid leave - advanced 0.4%.

That is the biggest increase - not adjusted for inflation - since the year that ended in September 2008, when wages rose 3.1 percent.

Following a robust third fiscal quarter, wages and salaries in the USA are up by 0.9 percent this month so far - 3.1 percent this year - which is the highest level in a decade. That could lower the government's employment count when it's released Friday. Although this is good news for employees, the Federal Reserve has been raising rates in a speedy fashion to guard against future inflationary pressures, seemingly erasing big salary and hourly payroll gains. There were a record 7.1 million job openings in the economy in August, compared with only some 6.2 million unemployed. The Paychex IHS Markit Small Business Employment Watch report for October again reflects a tight labor market, a slight dip in hiring, and an uptick in wages. 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. That followed a 2.9 percent gain in the year to June.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, rose to 62.9 percent last month from 62.7 percent in September.

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 US central bank signal an increase in December.

Workers at United States Steel Corp X.N are set to receive a hefty pay rise also. The Conference Board, which produces the gauge, attributed the positive assessment to a strong labor market. They advanced 2.6 percent from a year earlier, compared with 2.9 percent in the second quarter.

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.

The jobs market is viewed as being close to or at full employment. Many economists expect that will be above 3 percent for the first time since April 2009.

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 Trump administration's $1.5 trillion tax cut package fades. Construction and manufacturing added 17,000, respectively. The service sector contributed 189,000 to the total.



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