One Sign Workers May Be Starting to Feel the Economic Thaw
The 0.4 percent increase in wages was included in this morning’s jobs report from the U.S. Department of Labor, which showed the unemployment rate held steady at 5.8 percent. Despite the unchanged bottom-line rate, the report included ample indicators to show the economy is improving.
For instance, it showed companies were hiring at the fastest pace since January 2012, and the economy was on pace for this year to show the best job growth in 15 years. The report showed widespread strength in the labor market last month, including a good gain in payrolls, as well as upward revisions to the September and October job totals. The sector that saw the biggest gain was professional and business services, including temporary help, which tends to happen before businesses increase more permanent hiring.
The report also showed a longer workweek and increased overtime, signaling more activity at businesses. The report “suggests a strengthening of the virtuous cycle between the improving labor market and further gains in consumer spending and business investment,” said Bob Hughes, senior research fellow at the American Institute for Economic Research.
And yet, consumer confidence has been growing slowly, perhaps because of slow wage growth up to this point, Hughes said. For the last 12 months, wages have increased at a rate of 0.1 or 0.2 percent per month, hardly a robust number, he said. November’s increase of 0.4 percent showed that perhaps wages may finally be catching up with an improving economy, he said.
“Stronger trends have to take that first step, and this could be it, but we’ll need more supporting data,” Hughes said. “We’ll need more months like this to say the economy has stepped up in its growth trajectory.”