US wage growth hits nine-year high

The Malta Business Weekly - - INTERNATIONAL -

Wages in the US grew at their fastest pace for nine years last month, the lat­est of­fi­cial fig­ures show.

The US La­bor De­part­ment said wages grew at an an­nual rate of 3.1% in Oc­to­ber, ac­cel­er­at­ing from a rate of 2.8% the month be­fore. The econ­omy also added 250,000 jobs last month, beat­ing ex­pec­ta­tions, while the job­less rate re­mained at 3.7%.

The re­port quickly be­came fod­der for po­lit­i­cal de­bate ahead of next week's high stakes con­gres­sional elec­tion.

Pres­i­dent Don­ald Trump cel­e­brated the fig­ures on Twit­ter as "in­cred­i­ble" and urged his fol­low­ers to "Vote Repub­li­can".

In an un­usual move, the White House also or­gan­ised a brief­ing call for re­porters to pro­mote the gains.

The top Se­nate Demo­crat, Chuck Schumer of New York, is­sued a state­ment of his own, aim­ing to re­di­rect voter at­ten­tion.

The lat­est num­bers "may look good" but should be con­sid­ered along­side other eco­nomic poli­cies, he said.

"When the av­er­age fam­ily sees their health care costs go up be­cause of Repub­li­can ac­tions, these num­bers will mean lit­tle," he said.

Among econ­o­mists, there was wider agree­ment that the jobs re­port pointed to strength in the US econ­omy, de­spite re­cent wor­ries that weak­ness may be emerg­ing in some sec­tors such as hous­ing and trade.

They said a rise in the num­ber of peo­ple en­ter­ing the work­force in­di­cated con­fi­dence in the labour mar­ket, while wage gains sug­gested the ro­bust hir­ing cli­mate is start­ing to ben­e­fit the av­er­age worker.

Av­er­age hourly earn­ings for all pri­vate work­ers hit $27.30 in Oc­to­ber, up 83 cents from a year ear­lier. That marked the strong­est an­nual rise since April 2009. "To­day's jobs re­port is a land­mark in the long re­cov­ery since the Great Re­ces­sion, show­ing the power of a tight labour mar­ket to raise pay for Amer­i­can work­ers if al­lowed to run hot for a suf­fi­ciently long time," said An­drew Cham­ber­lain, chief econ­o­mist at the job web­site Glass­door.com. On av­er­age, the US econ­omy has added 218,000 jobs a month over the last three months - well above the rate needed to keep up with pop­u­la­tion growth.

The gains in Oc­to­ber oc­curred in most in­dus­tries, with the health­care sec­tor adding 36,000 jobs, man­u­fac­tur­ing 32,000 and con­struc­tion 30,000.

Em­ploy­ment in the leisure and hos­pi­tal­ity sec­tor rose by 42,000 last month. That fol­lowed no change in Septem­ber, which the La­bor De­part­ment said was prob­a­bly due to the im­pact of Hur­ri­cane Florence.

Econ­o­mists said the fig­ures all but guar­an­tee an­other US in­ter­est rate rise be­fore the end of the year.

Ian Shep­herd­son, chief econ­o­mist at Pan­theon Macroe­co­nomics, said: "In short, the labour mar­ket con­tin­ues to tighten. Noth­ing in this re­port will make the Fed think that skip­ping the De­cem­ber [in­ter­est rate] hike is a good idea."

The Fed­eral Re­serve last raised in­ter­est rates in Septem­ber, bring­ing the tar­get for the bank's bench­mark rate to a range of 2%-2.25%. The move was the bank's eighth rate rise since 2015, con­tin­u­ing its pol­icy of grad­ual in­creases.

The Fed has said the US econ­omy is strong enough to ab­sorb the rises, which are in­tended to head off un­con­trolled in­fla­tion. How­ever, Mr Trump has crit­i­cised the Fed's ac­tions, blam­ing them for re­cent tur­bu­lence in the stock mar­ket.

When asked last month by the Wall Street Jour­nal about what he saw as the big­gest risks to the US econ­omy, Mr Trump said: "To me the Fed is the big­gest risk, be­cause I think in­ter­est rates are be­ing raised too quickly."

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