US: Employment dynamics and secondary effects from wage inflation
We’ll be following the October NFP and details, following the disappointing job numbers for the past month, after the tapering announcement at the FOMC meeting.
We’ll be following the October NFP and details, following the disappointing job numbers for the past month, after the tapering announcement at the FOMC meeting. If the labor market data for October is in line with the relevant PMI sub-indices, it may indicate a recovery from 194K in September to 380-400K. The market expectation is 450K in the headline and 415K in the private sector. Wage growth will also be monitored for the second round of inflationary pressures.
The September jobs report pointed to 194K increases, well below estimates, showing that labor supply is currently the main challenge to labor market recovery. Hiring in September was lower than normal, which resulted in a decline after seasonal adjustment. Recent employment changes are difficult to interpret, as pandemic staffing fluctuations in public and private education disrupt normal seasonal hiring and firing patterns. Difficulty finding staff this school year had led to a decline in the education sector after adjusting for typical seasonal recruitment patterns. In October, however, seasonal adjustment effects will probably not be as severe. While the factors that discouraged workers from seeking job did not disappear in the past month, many have eased. These restraining factors stand out in two groups; Covid fears and childcare. Returns to work are increasing amid strong pay rises alongside the end of extra unemployment benefits.
The unemployment rate is expected to fall from 4.8% to 4.7% in October. There has been a total decrease of 1.1 points in the last 3 months. The modest downward trend of the last month will likely continue in October. The real dimension is the wages. Many businesses have to make more salary increases to fill employment positions. Inflation demands high wage increases on the workers’ side; The periodical spending ability it provides will be evaluated in terms of household incomes, its transformation into spending and its effect on inflation. At the point of conversion to inflation, the choice between saving and spending is important. The belief that the increase in inflation will continue can lead to demand for many goods and services and bring spending to the fore. Financial uncertainty, on the other hand, brings savings to the fore and delay spending. However, as the labor market is on a recovery trend, we think that persistent income concerns have eased.
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