Only moderate wage increases in the USA until now, despite continued em-ployment growth

In September, wages in the United States again rose by only 0.3 percent compared with the previous month. For the year as a whole, this corresponds to a wage increase of 2.8 percent. This means that growth rates are still lagging behind the growth rates seen in previous economic upswings. The depth of the preceding crisis undoubtedly plays a key role here. Several years of high unemployment were the consequence of the last recession, and for a while the unemployment rate was even in double figures.

Nevertheless, the assertion that a shortage of qualified labour leads to rising wage demands still applies today. At the end of this year, average wage growth of just under three percent will likely be recorded, higher than in 2017 (2.5%). According to our estimates, wage dynamics will continue to pick up as a result of the very low unemployment and can be expected to already reach around 3.5 percent in 2019. Even though the rates will still not match those of earlier boom periods, pressure from wages is nonetheless very gradually building up. This should ultimately also have an impact on the increase in consumer prices. With its course of moderate monetary tightening, the US Federal Reserve shows that it is well aware of these risks.

While recent figures on wage developments do not indicate the risk of sizeable increase rates, a signal in this direction is nonetheless deriving from the renewed decline in the unemployment rate. At only 3.7 percent, September’s rate is the lowest since autumn 1969. For the first time since 2000, less than six million unemployed persons have been counted. In September 2012, more than twice as many US citizens were unemployed!

The increase in the number of jobs in September only turned out below expectations due to the bad weather conditions. The already strong employment growth reported in the two preceding months was however revised upwards. This means that almost 190,000 new jobs were created each month in the third quarter, a more than comfortable quarterly balance for the US economy.

Not only are the high readings of the opinion polls suggesting that the US economy will continue this momentum. In the coming year, we expect economic growth of 2.7 percent which is likely to be only slightly lower than this year. The robust growth in employment will therefore continue in the coming months. However, the growing shortage of qualified staff is likely to have a somewhat decelerating effect, while wage demands pick up.

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