The U.S Department of Labor’s August report revealed 201,000 jobs and an average wage increase of 2.9 percent reports CNN.
Both figures are above what analysts predicted, although in the case of the jobs, that is only a slight increase. The growth in the number of jobs in the country continues a strong run in that statistic as companies add more jobs to the economy.
The wages statistic may be a little deceptive. Unlike the jobs number, wages are calculated year-on-year so the 2.9 percent increase is related to August 2017 and not July 2018. The number also does not factor for inflation which has been steadily rising this year decreasing the value of a raise an employee receives.
Wages may not have the positive trend that jobs have had, with a greater number of young people entering the workforce in the coming months, particularly as college graduates get jobs, and doing so at a lower pay rate which will push the average down. Another way to check wage growth, the total cost to employers, is rising, suggesting that wage growth will not continue with such rapid increases.
“We don’t think it’s a fluke, we think we are at that stage where the labor market has gotten so tight that you’re going to see upward pressure on wages,” said Lizz Ann Sonders, Chief Investment Strategist at Charles Schwab.
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The gain in jobs came largely from the professional and business services sectors with healthcare and wholesale trade also having a significant increase. On the downside, manufacturing was a surprise loser, down 3,000 jobs, decreasing for the first time since July 2017.
Employment gains have been steady, with the year-on-year average at 196,000 putting August slightly over the average and the 95th straight month an increase has been observed. Despite that, the Department of Labor revised employment growth projections down 50,000 over the last two months which would make August seem like a slowdown. Traditionally, August is a commonly revised report so all these numbers are not completely final.
The employment rate has been so strong in recent months that employers have struggled to find enough employees to fill jobs, with the number of job openings exceeding the number of unemployed since March. That has no doubt been part of the reason for the increase on wages, with the Wall Street Journal reporting that as the cost of living has increased workers are demanding more wages, knowing that they can go elsewhere due to the number of jobs available in the market.