Daily Management Review

Rise In Hiring In U.S. With Annual Wage Growth Highest Since 2009


02/07/2018




Rise In Hiring In U.S. With Annual Wage Growth Highest Since 2009
Wages and job growth in the U.S. grew in January to touch the highest annual growth point in over 8-1/2 years which led to enhanced expectations of higher inflations this year because of full employment in the labor market.
 
The U.S. Labor Department said that after adding 160,000 jobs in December, 200,000 jobs were added in nonfarm payrolls in January.
 
The rate of unemployment is also at 17-year low of 4.1 percent. There was a year-on-year increase in the average hourly earnings of 2.9 per cent as the figure recorded a boost of 0.3 per cent in January compared to December to touch $26.74, following an increase of 0.4 per cent in December. This year-on-year increase was the largest since 2009. However, the biter cold weather had resulted in workers adding a fewer hours last month.
 
The strong momentum in the U.S. economy was underscored by the strong employment report. This data has raised hopes of an aggressive attitude of the Federal reserve with respect to increasing rates pf interest this year. in 2017, the Fed had increased borrowing rate three times and has indicated three rate hikes again form 2018. 
 
“The acceleration in average hourly earnings growth punches a hole in the narrative that wage growth remains lackluster,” said Scott Anderson, chief economist at Bank of the West in San Francisco. “The Goldilocks view of inflation is being sorely challenged right now.”
 
The rise in inflation would be more towards the target set by the central bank for this year, officials of the bank had said earlier in Wednesday. The labor market was labelled as having “continued to strengthen,” and economic activity as “rising at a solid rate” by those policymakers who had pushed to keep rates of interest unchanged.
 
A possible rate increase in March has been factored in by the U.S. financial markets.
 
There are some worries that there can be over heating of the U.S. economy by the $1.5 billion tax cut package announced by the Trump administration and which was enacted into law by the Republican-controlled U.S. Congress in December. It is the largest change in taxation policies in the country on over 30 years.
 
According to President Donald Trump and other Republicans, here would be a creation of jobs and the economic growth would be boosted by the fiscal stimulus that encompasses a lowering of corporate taxations rates in the country from 35 per cent to 21 per cent.
 
“If the labor market is this strong and the tax cuts have yet to kick in, what will it look like when households and businesses actually start spending the money?” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland Pennsylvania. “No good economy goes unpunished and the punishment may already be starting to be meted out.”
 
(Source:www.reuters.com)






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