It may not be showing up in the averages reported, but the improvements within the U.S. job market are beginning to influence wage gains in industries that are hiring. A CNBC review of industry-data found that the strongest paycheck raises are happening in sectors that are posting significant job growth. Even relatively low-paying industries like retail, trade, leisure, and hospitality are seeing above-average growth in worker-paychecks.
Economists and investors were unenthusiastic about the August jobs report, which did not show big gains. The labor department survey showed that employers added 173,000 jobs in August—lower than the 220,000 expected by private forecasts. The official jobless rate went down to 5.1 percent. A different measure that tracks people who have stopped looking for jobs, or are working part-time but want a full-time job moved down to 10.1 percent.
The employment data has many economists expecting a rise in wages, as employers compete to bring on new hires, or offer raises to keep current employees from leaving for better opportunities elsewhere. The job market recovery from the Great Recession has generated small paycheck improvement though, with the average working seeing little incoming growth after adjusting for inflation.
Despite the slow and small gains, the August report did have some promising signs for wages. “After posting weak gains earlier this year, weekly earnings rebounded at a 2.4 percent annual rate last month. Some economists see the bounce as the early signs of a longer-term trend.” Gregory Daco, the head of U.S. macroeconomics at Oxford Economics said, “Gradually dissipating labor market slack will lead to firmer wage growth in the coming months.”
Meanwhile, John Silvia the chief economist at Wells Fargo Securities said, “Changes in hours are a good leading indicator for employment growth and also address one of the greatest areas of slack in the economy, which is the unusually large pool of part-time workers.” That news is good for American workers, but just another difficult piece of information for the Federal Reserve to consider in its decision.
The Fed’s decision has been complicated by conflicting economic signals and volatility in the stock market. Many investors think that the big slowdown in China’s economy could mean trouble for growth in the U.S. economy. Still, many economists think that the job gains and uptick in wages means U.S. recovery is on track—and that the Fed should move forward with its plan to raise rates.
As the Fed decision looms, and economists, market-watchers, and investors all speculate about the economy’s health and future, there are things you can do now to protect your wealth and insulate yourself from risk. Call an expert at Apex Financial Advisors to discuss your options and find a financial solution to meet your needs today.