U.S. Job Growth Slows as Wages See Unexpected Surge
Job Creation Below Expectations, Wage Growth Accelerates
U.S. private sector companies added fewer jobs than anticipated in November, while wage growth unexpectedly picked up, highlighting a potential obstacle in the fight against inflation.
According to the monthly ADP/Stanford Lab survey released Wednesday, the private sector generated 146,000 new positions. This figure fell short of the 163,000 job gains predicted by analysts, as indicated by the Market Watch consensus.
The report also revealed a resurgence in wage growth within the private sector for the first time in 25 months.
Wage Increases a Cause for Concern
“Wages are the bridge between the labor market and inflation, and what we saw this month, for the first time in two years, was an increase in wages, of 4.8%… against 4.7%,” noted Nela Richardson, chief economist of ADP, during an interview on CNBC.
“It seems minimal, but this rebound means that we are stabilizing at a higher rate of wage growth than before the pandemic,” she added. Richardson expressed concern, however, that this level of wage increase is largely incompatible with the Federal Reserve‘s (Fed) inflation target of 2 %.
Inflation, measured by the PCE index favored by the Fed, rebounded to 2.3% year-over-year in October, compared with 2.1% in September.
Official Job Figures Expected to Show Strong Rebound
Private employment figures are generally considered a reliable indicator of official government figures, scheduled to be released on Friday. October’s numbers were heavily impacted by two devastating hurricanes and a strike within Boeing. Strikers and workers on temporary unemployment are classified as unemployed in the United States.
Consequently, analysts forecast a sharp increase in job creation for November. They expect a combined gain of 214,000 jobs across both the public and private sectors, a significant jump from the mere 12,000 positions added in October, according to the Market Watch consensus.
The unemployment rate, however, is projected to edge slightly higher, reaching 4.2% compared to 4.1% in October.
Fed Governor Christopher Waller stated on Monday, “The strike is over and it is likely that most of the jobs destroyed due to the hurricane have been recreated,” suggesting a belief that November will see a robust rebound in job growth.
What factors are mentioned that the Federal Reserve is considering in its decision on future interest rate hikes?
## Interview Transcript
**Host:** Welcome back to the show. Joining me today is economist Dr. Emily Carter to discuss the latest jobs report. Dr. Carter, the headline seems to be slowing job growth but unexpectedly strong wage increases. Can you elaborate?
**Dr. Carter:** Absolutely. The recent ADP/Stanford Lab survey [[Not provided]] shows that while the private sector added 146,000 jobs in November, this fell short of the expected 163,000. This suggests that job creation is slowing down, which could be a sign that the economy is cooling. However, the report also indicates that wage growth accelerated unexpectedly, marking the first increase in 25 months. This could complicate the Federal Reserve’s efforts to tame inflation.
**Host:** So, what does this mean for the average American?
**Dr. Carter:** Well, the good news is that those who are employed are likely seeing larger paychecks. This can be beneficial for consumers and stimulate the economy. However, rising wages can also contribute to inflation if businesses respond by raising prices. Ultimately, the impact on the average American will depend on how the Fed reacts to this data.
**Host:** And what about the Fed’s perspective? What are they likely to do next?
**Dr. Carter:** It’s a tough call. The Fed is walking a tightrope, trying to curb inflation without triggering a recession.
Slower job growth might suggest a need to ease up on interest rate hikes, but the unexpected surge in wages could convince them to stay the course. They will be closely watching future economic indicators to make their next move.
**Host:** Dr. Carter, thank you for shedding light on this complex economic landscape.
**Dr. Carter:** My pleasure.
