- Grigory Dukor/Reuters
- Wages increased in August at their fastest year-on-year pace since the Great Recession, the US jobs report released Friday showed.
- Wage growth has been sluggish for most of the ongoing economic recovery.
- The report also showed that employers added more nonfarm payrolls than had been forecast, while the unemployment rate remained at an 18-year low of 3.9%.
US employers added more jobs than forecast in August, and wages increased at their fastest pace since the Great Recession, a government report showed on Friday.
The jobs report from the Bureau of Labor Statistics showed that nonfarm payrolls increased by 201,000 on net, while the unemployment rate was unchanged at 3.9%. Economists had forecast that 190,000 net jobs were added and that the unemployment rate fell to 3.8%, according to estimates compiled by Bloomberg.
Wage growth, which has been a major laggard of the ongoing economic recovery, was more impressive than forecast. Average hourly earnings increased by 0.4% month-on-month. And at 2.9% year-on-year growth, wages increased at their fastest pace since June 2009.
Several other reports show that many employers are running out of skilled workers to hire. With job openings exceeding the number of people seeking work, and with initial jobless claims at their lowest level since 1969, the labor market is still largely in good shape.
“Jobs are plentiful today … that’s not the problem,” Jim Baird, the chief investment officer of Plante Moran Financial Advisors, said in a note.
“Increasingly, the challenge is one for employers trying to find workers, particularly those with the skill set to fit their needs.”
August was the 95th consecutive month in which American employers hired more people than were fired, and there’s never been a longer streak.
Even a measure of unemployment that captures discouraged workers, and those who work part time but would rather have a full-time job, fell to a 17-year low.
The biggest job gains in August came from the healthcare and professional and business services sectors. Employers in the apparel, motion picture, and telecoms sectors lost more people than they hired. Manufacturing employment fell for the first time in a year.
The BLS bumped down its initial estimates of job gains in June and July by a combined 60,000 jobs, though both remained in line with the average over the past year.
But August’s gains could be revised higher; this has happened in 14 of the last 17 years, according to Rick Rieder, who manages $1.9 trillion as BlackRock’s chief investment officer of global fixed income.
“Though slightly tongue-in-cheek, we think today’s employment report serves as a capstone to one of the greatest labor market recovery periods of all time, with the economy creating new jobs in an impressive manner, and wage rates finally rising nicely,” Rieder said in a note.
This jobs report is likely to bolster the Federal Reserve’s decision to raise interest rates, as it is widely expected to do when it holds a policy meeting September 25-26. In particular, the Fed may view the increase in wages as a sign inflation is picking up.