Last month, job growth in the United States remained steady, while salaries rose substantially – indicators that the world’s largest economy still faces a tough battle as it attempts to reign in inflation.
According to official data, employers gained 263,000 positions while the average hourly wage increased 5.1% over the previous year.
The rate of unemployment stayed at 3.7%.
Despite the US central bank’s efforts to calm the economy and stabilize prices by raising interest rates, the report was better than anticipated.
In response to inflation – the rate at which prices are rising – that is nearing a 40-year high, the Federal Reserve has increased interest rates this year at the quickest rate since the 1980s.
Analysts have foreseen a decline in job creation as a result of enterprises slowing expansion or cutting back due to increasing costs.
Despite news of layoffs in certain industries, such as housing and technology, the US Department of Labor indicated on Friday that the labor market remains robust.
In November, bars, restaurants, and healthcare companies were the primary employers. Even in areas like construction and manufacturing, which were projected to face job losses, employment increased.
Analysts opined that this could be good news for employees, given the concern that rising borrowing prices could precipitate a sharp rise in unemployment.
The strong wage growth, they added, will continue to exert upward pressure on prices, suggesting that the Federal Reserve will continue to raise interest rates in the coming months.
“Fed officials will not have missed the fact that average hourly earnings have gradually increased over the previous three months, exceeding all forecasts and moving in the opposite direction of what they desire,” said Seema Shah, chief global strategist at Principal Asset Management.
“Yes, it’s a positive thing that the US labor market is so vigorous. But it is alarming that wage pressures continue to increase.”
While wages are rising, they are not increasing as quickly as prices. The inflation rate reached 7.7% last month. Even while the unemployment rate has decreased since June, when it reached 9.1%, it is still around a 40-year high.
Ian Shepherdson of Pantheon Macroeconomics stated, “We still believe a deceleration in wage growth is likely, but only because we expect payrolls to drop significantly in the first quarter due to both slower gross hiring and increased layoffs.”
“Emerging evidence on both is consistent with this narrative, but the Fed must see it in the hard employment numbers”
