Wages Highest In 10 Years, Unemployment Remains Level Before Friday’s Jobs Release

Wages Highest In 10 Years, Unemployment Remains Level Before Friday’s Jobs Release

The gain was an increase from the second quarter's 0.6% advance and matched expectations of economists surveyed by The Wall Street Journal.

In its monthly National Employment Report, ADP said the economy produced 227,000 private sector jobs between September and October.

The employment cost index, which tracks the hiring cost for USA employers quarterly, rose 0.8 percent during the third quarter, beating the estimated 0.7 percent that economists surveyed by Refinitiv ahead of Wednesday's release predicted.

Private sector wages and salaries rose 0.8 percent in the third quarter after increasing 0.6 percent in the prior period.

Wednesday's report showed private-sector wages and salaries rose 3.1 percent in the third quarter from a year earlier, the best pace since 2008.

The Employment Cost Index, the broadest measure of labor costs, increased 0.8 percent in the third quarter, the Labor Department said. He added that the gains are a "testimonial to the robust employment picture is the broad-based gains in jobs across industries". It is also considered a better predictor of core inflation. There are a record 7.1-M job unfilled openings in the economy. The annual increase is expected to surpass 3 percent in October's figures, which would be the first gain at that pace since 2009.

There were also big gains in construction, professional and business services payrolls, and manufacturing, where employment increased by the most in 10 months.

Firming wages support the view that inflation will hover around the Fed's 2.0 percent target for a while.

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USA companies added jobs in October at the healthiest pace in eight months, and wages rose by the most in a decade, the latest evidence of the durable strength of the US job market.

The Present Situation Index - based on consumers' assessment of current business and labor market conditions - turned in an even bigger gain, rising from 169.4 to 172.8. They were up 2.6% in the 12 months through September after rising 2.9% in the year to June.

"The strength in the ADP report supports our view that the underlying trend in the labor market remains upbeat", said Daniel Silver, an economist at JPMorgan in NY.

"The report shows a booming USA economy with a sufficient whiff of wage inflation to keep the Fed on track to raise rates in December and at least twice next year", said David Kelly, chief global strategist at JPMorgan Funds in NY.

Economists say his policies deserve some credit for triggering faster growth, but unemployment has been falling steadily for eight years and wages have been inching higher.

That is forcing more companies to raise pay to attract and keep workers. The Conference Board said its Consumer Confidence Index reached 137.9 this month, up from 135.3 in September.

"It's not about the tax cuts".

Information for this article was contributed by Heather Long of The Washington Post; by Christopher Rugaber of The Associated Press; and by Shobhana Chandra of Bloomberg News.

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