Weak U.S. Wage Gain May Have Been One-Off But Fits Slowing Trend
Weak U.S. Wage Gain May Have Been One-Off But Fits Slowing Trend
(Bloomberg) -- One unwelcome surprise in Friday’s U.S. jobs report was the sharp pullback in wage growth -- a head-scratcher considering pay was accelerating for most workers at the start of the fourth quarter.
Average hourly earnings for all workers rose a less-than-forecast 2.9% in December from a year earlier, the smallest annual gain since mid-2018. Excluding supervisors, growth in hourly pay also decelerated, rising 3%. That was the weakest advance since September 2018 and big let-down from the 3.6% advance just two months prior that was the strongest in a decade.
While the slowdown may have been exaggerated by some one-off factors, it “fits with the ongoing trend which has been weaker wage growth despite the fact that you see a labor market that looks historically tight according to these traditional metrics,” said Matthew Luzzetti, chief U.S. economist at Deutsche Bank AG.
After peaking in February, year-over-year wage gains for all workers have broadly decelerated, along with hiring and hours worked. For nonsupervisory and production workers, who make up the largest share of the workforce, year-over-year wage growth eased in December across many sectors, including transportation, retail, wholesale, information, leisure and business services.
The reasons for the sharp slowdown in worker pay last month aren’t obvious.
It could relate to the late timing of Thanksgiving. It’s not clear how well the government’s seasonal adjustment process captured the variation from years past. Other job indicators, such as weekly filings for unemployment benefits, have seen fluctuations largely attributed to that process. However, unadjusted and adjusted hourly earnings figures both showed weaker pay gains.
Another consideration is that the wage numbers could have been influenced by the composition of the job gains. Payroll growth in the retail-trade industry was the strongest in almost three years, adding 41,200 workers in December from the prior month. Those jobs are on the whole paid less than the national average.
At the same time, payrolls at professional and business services -- which are paid more than the national average -- posted the smallest gain in nearly a year.
--With assistance from Matthew Boesler.
To contact the reporter on this story: Reade Pickert in Washington at epickert@bloomberg.net
To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Vince Golle, Ana Monteiro
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