The Bureau of Labor Statistics of the Labor Department issued its monthly Employment Situation earlier today. The results were not spectacular, but they were good:
–the economy added +161,000 new jobs last month
–revisions to the prior two months’ figures were both positive, totaling +44,000 positions.
Nothing in this to derail the Fed from raising the Fed Funds rate next month.
Average hourly non-farm wages in the US were $25.92 in October. That’s $0.10/hr more than in September and $.18 more than in August. This doesn’t sound like much. But the year-on-year growth in wages over the past year has been $.71/hr, which is a wage growth rate of 2.8%. If we were to annualize the results of the past two months–not a calculation you’d want to bet the farm on–the growth rate is 4.2%.
Maybe too preliminary, but also maybe an early warning of rising wage pressure in the US. The importance of that is that we would have (finally) reached full employment–meaning also that the Fed switching to rate-raising mode is at best timely. At worst, it would mean that the Fed is at least a little late to the party.
Of course, given the scary example of Japan repeatedly tightening policy prematurely and snuffing out economic rebounds over the past quarter-century, the Fed has from the outset deliberately decided that later is better than sooner. Nevertheless, further wage gains will translate into more aggressive Fed tightening moves.