WASHINGTON (Reuters) – US private sector salaries rose most sharply in eight months in October, suggesting that overall employment growth accelerated this month after Hurricane Florence weighed on restaurant and retail employment in September ,
FILE PHOTO: A signboard advertises vacancies at an Embassy Suites hotel in Waltham, Massachusetts, USA (December 13, 2017). REUTERS / Brian Snyder
The strong labor market is gradually pushing up compensation, while other data show a sharp increase in labor costs in the third quarter on Wednesday.
The National Employment Report of the ADP showed that employment in the private sector rose by 227,000 jobs last month, surpassing economists' expectations by an increase of 189,000. The payroll in September was reduced from 230,000 to 218,000.
The ADP report is created in collaboration with Moody's Analytics. It was released before the fuller employment report for October was released on Friday.
According to a Reuters survey of economists, non-farm payroll numbers were likely to recover by 190,000 in October, after the restaurant and retail staff tax drop in Florence in September.
The number of employees rose by 134,000 in September, the lowest in the year. The unemployment rate is still forecasted at a near 49-year low of 3.7 percent in October.
The dollar has barely changed against a basket of currencies, while yields on US Treasuries rose to session highs.
Separately, the Labor Cost of Employment Index showed that wages and salaries, which account for 70 percent of employment costs, increased 0.9 percent in the third quarter after rising 0.5 percent in the previous period.
Thus, the annual increase in wages and salaries increased to 2.9 percent, the largest increase since September 2008 from 2.8 percent in June to June. Wage growth was fueled by an increase in transport and warehousing, probably due to a lack of truck drivers. In other industries, including information, healthcare, leisure and hospitality, profits were also made.
The job market is considered close to or at full employment. There is a record of 7.1 million job vacancies in the economy.
The increase in wages raised the Employment Cost Index, the widest benchmark for labor costs, which rose 0.8 percent in the third quarter, after rising 0.6 percent in the second quarter. The EBI is seen by policymakers and economists as one of the better benchmarks for the slowdown in the labor market. It is also considered a better predictor of core inflation.
The Federal Reserve raised interest rates in September for the third time this year and removed a reference to "accommodative" monetary policy from its policy statement. The US Federal Reserve is expected to raise interest rates again in December.
Private sector wages rose 0.8 percent in the third quarter, after rising 0.6 percent in the previous quarter. They had risen 3.1 percent in the 12 months to September, the largest increase since the second quarter of 2008. June saw a 2.9 percent increase.
Wages in the states and municipalities rose 0.9 percent after rising 0.5 percent in the second quarter.
Total employee benefits increased 0.4 percent in the July-September quarter, after rising 0.9 percent in the second quarter. They had risen 2.6 percent in the 12 months to September after rising 2.9 percent in June to June.
Reporting by Lucia Mutikani; Arrangement by Andrea Ricci