September Jobs Report Shows Slower Wage Gains
Wage growth cooled in September, offering hints that labor shortages and inflation pressures might be easing as economic growth loses steam.
Average hourly earnings rose 5% in September from a year before, still rapid but below August’s 5.2% pace and the slowest annual rate since December 2021, the Labor Department said Friday.
They increased 0.3% in September from the month before, the same rate as in August, but half of January’s pace.
The Federal Reserve is raising interest rates aggressively to combat high inflation by slow hiring, spending and investment. Slowing wage growth and job gains could reflect the effects of rising borrowing costs and help reduce price pressures.
Pay gains haven’t kept up with inflation. Consumer prices rose 8.3% in August from a year earlier, the Labor Department said last month. So-called core prices, which exclude volatile food and energy prices, increased 6.3% in the year ended in August, up markedly from the 5.9% rate in both June and July—a signal that broad price pressures strengthened.
Wages accelerated sharply late last year and early this year as the economy reopened from pandemic-driven closures and employers competed for scarce workers.
In recent months, wage gains have slowed particularly in some of the industries where pay had been rising fastest.
Average hourly earnings in leisure and hospitality were up 7.9% in September from a year before, down from a recent peak of 13.3% in December 2021. Retailers boosted wages by 4.1% in the year ended in September, down from a recent high of 6.3% in February. And providers of education and health services recorded a 4.6% annual wage gain, below the recent peak of 6.9% in October 2021.
Despite the downshift, wages are still growing much faster than before the pandemic. Year-over-year pay increases averaged 3.3% a month in 2019, the last year before Covid-19 hit the U.S. economy.
Other recent trends suggest that wage growth could slow more in coming months as employers’ demand for workers ebbs.
The number of job openings declined over the spring and summer to 10.1 million in August from a record 11.9 million in March, the Labor Department reported Tuesday.
Job growth has also slowed. Employers added 263,000 jobs in September. Monthly job gains averaged 372,000 over the past three months, down from 444,000 in the first six months of the year, according to the Labor Department.
Some of the fastest-growing industries of the past two years have added fewer new jobs in recent months. Leisure and hospitality employers added an average 68,000 new jobs a month over the past three months down from 178,000 in the same period a year ago.
Fewer job openings could help hold down wage increases and curb inflation without widespread painful layoffs, said
Mary Daly,
president of the San Francisco Fed on Tuesday.
“There’s a lot of room for us to slow the pace of hiring and still not dive into the third and most painful place that everybody fears, which is outright layoffs,” she said.
This week’s labor market data keeps that hope alive, said
Stephen Stanley,
chief economist at Amherst Pierpont. “I don’t think they’re being overly optimistic.”
Write to David Harrison at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Wage growth cooled in September, offering hints that labor shortages and inflation pressures might be easing as economic growth loses steam.
Average hourly earnings rose 5% in September from a year before, still rapid but below August’s 5.2% pace and the slowest annual rate since December 2021, the Labor Department said Friday.
They increased 0.3% in September from the month before, the same rate as in August, but half of January’s pace.
The Federal Reserve is raising interest rates aggressively to combat high inflation by slow hiring, spending and investment. Slowing wage growth and job gains could reflect the effects of rising borrowing costs and help reduce price pressures.
Pay gains haven’t kept up with inflation. Consumer prices rose 8.3% in August from a year earlier, the Labor Department said last month. So-called core prices, which exclude volatile food and energy prices, increased 6.3% in the year ended in August, up markedly from the 5.9% rate in both June and July—a signal that broad price pressures strengthened.
Wages accelerated sharply late last year and early this year as the economy reopened from pandemic-driven closures and employers competed for scarce workers.
In recent months, wage gains have slowed particularly in some of the industries where pay had been rising fastest.
Average hourly earnings in leisure and hospitality were up 7.9% in September from a year before, down from a recent peak of 13.3% in December 2021. Retailers boosted wages by 4.1% in the year ended in September, down from a recent high of 6.3% in February. And providers of education and health services recorded a 4.6% annual wage gain, below the recent peak of 6.9% in October 2021.
Despite the downshift, wages are still growing much faster than before the pandemic. Year-over-year pay increases averaged 3.3% a month in 2019, the last year before Covid-19 hit the U.S. economy.
Other recent trends suggest that wage growth could slow more in coming months as employers’ demand for workers ebbs.
The number of job openings declined over the spring and summer to 10.1 million in August from a record 11.9 million in March, the Labor Department reported Tuesday.
Job growth has also slowed. Employers added 263,000 jobs in September. Monthly job gains averaged 372,000 over the past three months, down from 444,000 in the first six months of the year, according to the Labor Department.
Some of the fastest-growing industries of the past two years have added fewer new jobs in recent months. Leisure and hospitality employers added an average 68,000 new jobs a month over the past three months down from 178,000 in the same period a year ago.
Fewer job openings could help hold down wage increases and curb inflation without widespread painful layoffs, said
Mary Daly,
president of the San Francisco Fed on Tuesday.
“There’s a lot of room for us to slow the pace of hiring and still not dive into the third and most painful place that everybody fears, which is outright layoffs,” she said.
This week’s labor market data keeps that hope alive, said
Stephen Stanley,
chief economist at Amherst Pierpont. “I don’t think they’re being overly optimistic.”
Write to David Harrison at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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