U.S. wages and salaries rose by the most in a decade while private sector payrolls increased by the most in eight months in October, suggesting overall job growth accelerated this month after Hurricane Florence weighed on restaurant and retail employment in September.
The Labor Department’s Employment Cost Index showed wages and salaries, which account for 70 percent of employment costs, jumped 0.9 percent in the third quarter after climbing 0.5 percent in the prior period.
That pushed the annual increase in wages and salaries to 2.9 percent, the biggest gain since September 2008, from 2.8 percent in the year to June. Wage growth was boosted by a jump in transportation and warehousing, likely reflecting a shortage of truck drivers. There were also gains on other industries, including information, healthcare and leisure and hospitality.
The strong jobs market is gradually putting upward pressure on compensation, with other data on Wednesday showing a solid increase in labor costs in the third quarter.
The ADP national employment report showed private sector employment rose by 227,000 jobs last month, beating economists’ expectations for an increase of 189,000. September’s payrolls count was revised down to 218,000 from 230,000.
The ADP report is jointly produced with Moody’s Analytics. It was published ahead of the release of the government’s more comprehensive October employment report on Friday.
According to a Reuters survey of economists, nonfarm payrolls probably rebounded by 190,000 jobs in October after Florence depressed restaurant and retail payrolls in September.
Payrolls increased by 134,000 in September, the fewest in a year. The unemployment rate is forecast unchanged at a near 49-year low of 3.7 percent in October.
The dollar was little changed against a basket of currencies after the data, while U.S. Treasury yields rose to session highs.Separately,
The jobs market is viewed as being close to or at full employment. There are a record 7.1 million job openings in the economy.
The surge in wages lifted the Employment Cost Index, the broadest measure of labor costs, which increased 0.8 percent in the third quarter after rising 0.6 percent in the second quarter. The ECI is widely viewed by policymakers and economists as one of the better measures of labor market slack. It is also considered a better predictor of core inflation.
The Federal Reserve increased interest rates in September for the third time this year and removed a reference to monetary policy remaining “accommodative” from its policy statement. The U.S. central bank is expected to raise rates again in December.
Private sector wages and salaries rose 0.8 percent in the third quarter after increasing 0.6 percent in the prior period. They were up 3.1 percent in the 12 months through September, the biggest increase since the second quarter of 2008. That followed a 2.9 percent gain in the year to June.
State and local government wages increased 0.9 percent after advancing 0.5 percent in the second quarter.
Benefits for all workers increased 0.4 percent in the July-September quarter after rising 0.9 percent in the second quarter. They were up 2.6 percent in the 12 months through September after rising 2.9 percent in the year to June.