Wages just hit their highest level in a decade

Wages just hit their highest level in a decade

The strong jobs market is gradually putting upward pressure on compensation, with other data Wednesday showing a solid increase in labor costs in Q-3.

Benefits increased 2.5 percent in the private sector, the Bureau of Labor Statistics (BLS) reported October 31.

But the anticipated bounce back in job growth is likely to be tempered some what by Hurricane Michael, which struck the Florida Panhandle in mid-October.

Sustained labor market strength eased fears about the economy's health following weak housing and business spending data.

When adjusted for inflation, wage increases were higher in 2015 and 2016 than they are now, according to the Employment Cost Index.

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

With 3.7 percent unemployment, some economists view the jobs market as being close to or at full employment.

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Nonfarm payrolls increased by 250,000 jobs last month as employment in the leisure and hospitality sector bounced back after being held down by Hurricane Florence, which drenched North and SC in mid-September. Economists believe that the Labor Department numbers will show employers added 190,000 jobs.

Payrolls increased by 134,000 in September.

In the breakdown of the index, private-sector wages and and salaries jumped 3.1 percent over the 12-month period ending in September, the biggest annual increase since 2009. There are a record 7.1 million job openings in the economy. The report shows consumers who live in the South enjoyed the strongest job growth, while those in the West saw their paychecks grow the most.

But benefits for all workers increased only 0.4 percent in the July-September quarter after rising 0.9 percent in the second quarter. That was the biggest increase since September 2008 and followed a 2.8 percent gain in the year to June.

"The report shows a booming USA economy with a sufficient whiff of wage inflation to keep the Fed on track to raise rates in December and at least twice next year", said David Kelly, chief global strategist at JPMorgan Funds in NY.

Some economists said Fed officials were likely to view the low unemployment and rising wages as modestly inflationary. In those years wages were only growing in a range of 2 percent to 2.5 percent a year, but inflation remained low. The service sector contributed 189,000 to the total.

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. This article is strictly for informational purposes only.

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