The August jobs report released Friday showed major growth in Americans’ wages as the economy continued to add new jobs.
Average hourly earnings increased 2.9 percent for the month, while nonfarm payrolls grew by 201,000, CNBC reported. Economists expected a 2.7 percent increase in wages and only 191,000 new jobs.
Unemployment remained at a low of 3.9 percent.
“The U.S. economy is barreling full steam ahead,” wrote economist Leslie Preston of TD economics, according to USA Today.
Although the overall unemployment rate was steady, the jobless rate for black Americans fell from 6.6 percent to 6.3 percent, marking the second lowest rate on record behind May’s 5.9 percent.
“The August jobs report shows continued, strong job growth with 201,000 jobs created and an unemployment rate holding at 3.9 percent. More than 4 million jobs have been created since November 2016,” Labor Secretary Alexander Acosta said in a statement.
“Since 1970, the unemployment rate has registered below 4 percent just nine times; four of those months have been recorded during 2018. It is remarkable to see steady positive news regarding job growth month after month,” he continued.
Wage growth hit its highest rate since April 2009 and brought the average hourly wage up 10 cents to $27.16 per hour, CNBC reported.
“We’re finally seeing wage gains for some low-paid workers. These include things like baristas, cashiers and bank tellers, and I think that’s helping boost that average wage number,” said Andrew Chamberlain, chief economist at the job search site Glassdoor.
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Wage growth is a double-edged sword. When wage growth is too small, workers can’t pay their bills. But when wages increase too fast, it can bring fears of inflation. Experts expect the wage report might lead to action by the Federal Reserve to increase interest rates to prevent inflation.
“If we continue to see wage growth move higher, it puts the Fed in play for a fourth rate hike, absent tariff concerns,” said Quincy Krosby, chief market strategist at Prudential Financial. “I don’t think this is going to be the beginning of a downturn in the market, but the fact is there had been other reports leading up to this suggesting wages had been moving higher. Today’s print is indicative of a tight labor market.”
That action might make stocks a less attractive investment, but bonds a more attractive option.
“The continued strength of the labor market keeps the Fed firmly on track to raise interest rates twice more this year,” said economist Andrew Hunter of Capital Economics.
Job growth in August was found in professions across the board.
The professional and business services sector led the way with 53,000 new jobs, followed by health care with 41,000. Construction, transportation and warehousing, leisure and hospitality, and mining also grew.
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