Post-hurricane season, unemployment at a 17 year low; more new jobs added than expected. Only downside is wage hikes aren’t keeping up, Bloomberg experts say:
Even though job gains are well in excess of the natural growth rate for the labor market, labor scarcity is not yet driving wage pressures higher. The moral of the story from this jobs report is that full employment is indeed much lower in the current cycle relative to history. While average hourly earnings were tepid, the sizable payroll gain and increase in the nonfarm workweek indicate that there was substantial wage-income generation in the economy last month. — Carl Riccadonna and Yelena Shulyatyeva, Bloomberg Economics
Why do you think that’s the case – or is it?
The data provide a clearer picture of the labor market after the volatility caused by two hurricanes mostly dissipated, though there may have been some lingering effects. While the job market remains a bulwark for the economy and investors see a Federal Reserve interest-rate hike next week as a near-certainty, the lack of acceleration in wages remains a puzzle that could factor into the pace of increases in 2018.
Average hourly earnings rose 0.2% from the prior month following a revised 0.1% drop, the report showed. Analysts had penciled in a gain of 0.3% for November. The gain from a year earlier followed a downwardly revised 2.3% advance for October.
Economists expect that in time, wages will post a sustained pickup, which has remained elusive in this expansion even though labor-market slack is steadily disappearing. Faster gains in paychecks would boost consumer spending, which accounts for about 70% of the economy. Jerome Powell, President Donald Trump’s nominee to head the Fed, said last month at his confirmation hearing that he doesn’t see wages signaling any tightness in the labor market.