Hiring is Up, and So Are Wages

The recent jobs report by the Bureau of Labor Statistics indicated that U.S. companies hired an additional 271,000 workers in October, pushing unemployment down to 5%. This report was better than many economists forecasted, and marks the lowest unemployment rate since 2008, before The Great Recession This report shows promise that the United States’ economy is continuing on its positive path towards healthy economic growth, which is an encouraging sign for businesses and for investors. Despite a global economic slowdown, the United States was unfazed and strong corporate performance continued to spur hiring.

In addition to the unexpected increase in jobs, there was a 2.5% year over year increase in wages for employees in October. This was the best year over year wage increase since July 2009. While the healthy level for wage growth according to the Fed is around 3.5%, the 2.5% growth experienced in October is a marked increase from wage growth over the past year. With companies hiring more employees and also paying employees a higher wage, perhaps the United States’ rate of inflation will finally begin to pick up. Currently, the United States’ inflation rate is well below the Fed’s target of 2%, but with signs of life in the economy, it is possible that the spread between target inflation and actual inflation will begin to diminish. While nothing certain can be said as of now, these factors suggest that the United States’ economy continues to perform and bring about implications of a federal funds rate hike in December.

  • Eric Chao