U.S. wage growth accelerates as inflationary pressure rises

U.S. wage growth accelerates

US wage growth accelerated into its quickest pace last month since 2009 as the turnover of the White House from President Barack Obama to President-elect Donald Trump signals a rising inflationary pressure.

The Department of Labor said on their final employment report before Mr. Trump’s inauguration that the average hourly earnings rose 2.9 percent from December 2015, initialing the fastest year-on-year growth since the financial crisis.

The rate further rose 0.4 percent in December 2016, exceeding the 0.3 percent expectation.

The road to recovery

The US employment levels, which plunged down during the financial crisis, has recovered. American companies added about 15 million jobs since the 2010 low and the recent data shows that the economy added 156,000 jobs in December, but employment wages have been far slower to recover.

December’s hourly earnings rise was the first real sign of a strong job growth which pushes the wage to climb. Yields US government debt boosted after the data was released, signaling that investors are now aware that the economy is heading towards a higher inflation period for the first time after the crisis.

Alan Ruskin, an analyst at Deutsche Bank said the rise in wage growth “is coming well before any fiscal stimulus hits, and underscores the unusual timing and therefore inflationary influence that a fiscal stimulus can have at this point in the business cycle”.

Mr. Trump vowed to release a large infrastructure spending program, cut taxes, loosen regulation and take measures that aims to bring manufacturing jobs back from low production-cost countries like Mexico to boost growth.

The unemployed rate rose from 4.6 percent to 4.7 percent, identical to the forecasts. But the 156,000 new jobs missed Wall Street expectations of 157,000. The November figure was revised higher to 204,000 from 178,000.


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