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Wages growing at fastest rate in 9 years as unemployment stays at 3.9 percent

The Washington Post

September 07. 2018 9:42AM
Darianna Greenleaf, from Manchester, talks to a recruiter during the New Hampshire Employment Security Job and Resource Fair at the University of New Hampshire Manchester in March. The nation added a 201,000 jobs in August, the Labor Department reported Friday. (THOMAS ROY/UNION LEADER FILE)

WASHINGTON — The U.S. economy added jobs for the 95th straight month in August, a record-setting streak. The nation added a robust 201,000 jobs in August, the Labor Department reported Friday, and the national unemployment rate remained at 3.9 percent, one of the lowest levels in half a century.

New Hampshire unemployment, which remained at 2.7 percent in July, is among the lowest in the country. The state will release August figures later this month.

Wages grew at 2.9 percent in the past year, the best growth since 2009 and an encouraging sign that wages might finally be moving higher after years of sluggish gains.

Many business leaders have complained they cannot find the workers they need, especially for skilled jobs like welders or coders. Economists had expected that companies would start to raise wages significantly to attract — and keep — the talent they need, but pay has been creeping up slowly for much of the recovery.

“Wage growth is definitively accelerating. Employers are now struggling to fill open positions and have no choice but to raise wages quickly,” said Mark Zandi, chief economist at Moody’s Analytics. “Everything points to strong wage growth going forward.”

The last time unemployment was this low in the dot-com boom, wage growth was significantly faster — well above 3.5 percent. It’s unclear how much higher it will go in this business cycle. Inflation is also rising, which means most workers are seeing their wage gains wiped out by more expensive gas and rent.

This year is on track to be the best for job gains since 2015. The U.S. economy averaged 207,000 jobs a month so far this year, a sign companies continue to grow and don’t anticipate a downturn anytime soon.

“Today’s jobs report shows that the U.S. economy is continuing to expand and add jobs well into this cycle,” said Tony Bedikian, head of Global Markets at Citizens Bank. “We also saw a sharp uptick in average wages, which underscores how tight the U.S labor market has become.” Bedikian’s team helps companies manage interest rate and foreign exchange risk.

Hiring has been strong in nearly every industry this year from manufacturing to health care. Even retail, which many predicted would decline as stores like Toys R Us shuttered for good, is still adding jobs.

Job gains in August suggest that President Donald Trump’s trade war has yet to have a widespread hit to workers, although a handful of companies have announced layoffs already and more have threatened to ax jobs if Trump moves forward with additional tariffs, especially on China.

Trump has been touting the low unemployment rate and strong job gains since he took office as proof he is delivering results and his critics are wrong about him.

Unemployment for African Americans, Hispanics and Americans without high school degrees is at or near an all-time low, according to the Labor Department.

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