U.S. companies hiring at robust pace, wages rise faster

U.S. Employment Costs Rise More Than Forecast as Pay Jumps

Wages Rise 3.1 Percent, Fastest in a Decade

Wages and salaries for American workers in the private sector rose 0.8 percent over the past three months, while state and local government workers saw 0.9 percent more pay since July, according to data released Wednesday by the Bureau of Labor Statistics.The uptick exceeded expectations from analysts and outpaced the 0.5-percent gain in pay between April and June of 2018.

Strong annual wage growth would mirror other data published this week showing wages and salaries rising in the third quarter by the most since mid-2008.

In the private sector, compensation climbed almost 3 percent over the past year, wages and salaries jumped 3.1 percent and benefits 2.5 percent, the department reported.

Separately on Wednesday, the Labor Department's Employment Cost Index report showed wages and salaries, which account for 70 percent of employment costs, jumped 0.9 percent in the third quarter after climbing 0.5 percent in the prior period.

Employment gains have averaged 208,000 jobs per month this year, double the roughly 100,000 needed to keep up with growth in the working-age population.

Prices also have been rising in the past year, especially for gas and rent, but wages are outpacing inflation by a significant margin. There were a record 7.1 million job openings in the economy in August, compared with only some 6.2 million unemployed.

Wage growth was boosted by a jump in transportation and warehousing, likely reflecting a shortage of truck drivers. That's the biggest increase since September 2008.

U.K. Manufacturing Sees ‘Worrying Turnaround’ as Growth Slumps
Consequently, manufacturers tried to partly pass on higher cost burdens to their clients through increased output charges. United Kingdom manufacturing growth slumped to the lowest since the aftermath of the Brexit vote last month.

Firming wages support the view that inflation will hover around the Fed's 2.0 percent target for a while.

The Present Situation Index - based on consumers' assessment of current business and labor market conditions - turned in an even bigger gain, rising from 169.4 to 172.8.

The increase was led by improving pay for private-sector workers. They advanced 2.6 percent from a year earlier, compared with 2.9 percent in the second quarter. The U.S. central bank is expected to raise rates again in December. The jobs market is viewed as being close to or at full employment, with the unemployment rate at a near 49-year low of 3.7 percent.

USA companies added jobs in October at the healthiest pace in eight months, and wages rose by the most in a decade, the latest evidence of the durable strength of the US job market.

The rise has some economists anxious higher inflation may not be far behind. That is seen supporting the economy through at least early 2019 when gross domestic product is expected to significantly slow as the stimulus from the White House's $1.5 trillion tax cut package fades.

Manufacturing employment increased by 32,000 jobs in October after adding 18,000 positions in September. Most of the wage growth in the Employment Cost Index is coming from service-sector jobs.

Information for this article was contributed by Heather Long of The Washington Post; by Christopher Rugaber of The Associated Press; and by Shobhana Chandra of Bloomberg News.

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