All articles tagged with #wage inflation
AI engineers are being paid up to $900 per hour as consultants to help large companies adopt and integrate AI, reflecting high demand and technical expertise needed in the rapidly evolving field. This premium pay is driven by the scarcity of qualified professionals and the strategic importance of AI in enterprise settings, with companies seeking hands-on experts to execute AI projects and bridge the gap between strategy and implementation.
US job growth accelerated in November, with nonfarm payrolls increasing by 199,000 and the unemployment rate falling to 3.7%. The drop in the jobless rate alleviated fears of an impending recession and suggested that expectations of an interest rate cut by the Federal Reserve were premature. While the labor market is cooling, payroll gains remain above the level needed to keep up with population growth. The healthcare sector led the increase in payrolls, while retail employment declined. Average hourly earnings rose by 0.4%, maintaining an annual increase of 4.0%. The rise in labor supply could help control wage inflation, but wages are still rising too fast to meet the Fed's 2% inflation target.
US job growth surged in September, with nonfarm payrolls increasing by 336,000, the largest increase in eight months. The unemployment rate remained unchanged at 3.8%, while average hourly earnings rose by 0.2%, resulting in a year-on-year increase of 4.2%. The strong labor market suggests that the Federal Reserve may have room to raise interest rates again, although wage growth is slowing. However, financial markets and most economists believe that the Fed is unlikely to hike rates due to a recent surge in long-term US Treasury yields.
Costco's earnings for the fiscal fourth quarter exceeded expectations, but concerns about wage inflation and sales weakness persisted. The company reported an increase in gross margins but also highlighted wage inflation as an ongoing issue. Costco made an unplanned investment in starting salaries for new employees, deviating from its usual schedule, following a pay structure change by competitor Walmart. Despite these challenges, Costco's shares have performed well, and the company's membership fee revenue continues to grow. While some experts have reservations about the valuation, others believe Costco's consistency justifies its premium valuation.
Americans' salary expectations for new jobs have reached the highest level since 2014, with the lowest annual wage respondents would accept rising to $78,645. The increase in wages has been most pronounced for respondents over 45, with men desiring an average of $91,048 compared to women's $66,068. The Federal Reserve has been focused on taming wage inflation as part of its fight against overall inflation. However, there is a gap between desired salaries and actual earnings, with the average salary over the past four months being $69,475. The Fed aims for wage increases to be consistent with 2% inflation over time, but wage growth is currently higher. The labor market may be cooling, as job seekers and job-switching likelihood have declined, potentially impacting wage growth.
While the Federal Reserve's discussions on the economy, inflation, and interest rates are anticipated this week, the release of the employment cost index (ECI) on Friday is expected to be the most significant development for markets. The ECI, a highly regarded wage measurement, is projected to tick slightly slower in the second quarter, but still represents a year-over-year rise that may not align with the Fed's 2% inflation target. Concerns arise over the potential for a wage-price spiral if labor strikes and expensive contract settlements lead to a rebound in wage inflation. The ECI report will also shed light on union compensation, which has been falling behind nonunion compensation. Additionally, the quits rate from the JOLTS report, which is currently declining, tends to lead the wage and salaries series of the ECI.