Spotlight on Hourly Earnings: Inflationary? Opinions Vary
This morning I noted Another Wild Jobs Report: Payroll Employment Rose a Disappointing 20,000.
The month-over-month jump in hourly earnings are worth a closer inspection.
Hours and Wages
Average weekly hours of all private employees fell 0.1 hour to 34.4 hours. Average weekly hours of all private service-providing employees was flat at 33.3 hours. Average weekly hours of manufacturers fell 0.1 hours to 40.7 hours.
Average Hourly Earnings of All Nonfarm Workers rose $0.11 to $27.66. That a 0.51% gain. Average hourly earnings of private service-providing employees rose $0.11 to $27.43, a gain of 0.40%. Average hourly earnings of manufacturers rose $0.12 to $27.38, a gain of 0.44%.
Average hourly earnings of Production and Supervisory Workersrose $0.08 to $23.18. That's a 0.35% gain. Average hourly earnings of private service-providing employees rose $0.10 to $22.92, a gain of 0.44%. Average hourly earnings of manufacturers rose $0.06 to $21.90, a gain of 0.27%
Year-Over-Year Wage Growth
- All Private Nonfarm from $26.75 to $27.66, a gain of 3.4%
- All production and supervisory from $22.40 to $23.18, a gain of 3.5%.
Monthly swings can be wide, so it's best to look at trends in year-over-year growth, as the lead-chart does. Here is a closer look.
Year-Over-Year Wage Growth vs CPI 2013-2019
Starting August 2018, the year-over-year hourly earnings growth has been over 3% every month but October 2018. That's 6 out of seven months.
The Phillips Curve clowns will no doubt be singing ah ha! See!
Dismiss the thought. The Phillips Curve is random. It appears to work about 50% of the time. That makes it useless.
Opinion 1: Inflation
Opinion 2: Inflation
Opinion 3: Inflation
Opinion 4: Stagflation
Opinion 5: Benign
Opinion 6: Mine
I don't know, and they don't either.
I could not produce the charts of Lakshman Achuthan in Fred. But whether or not his charts are meaningful, I think Achuthan is on the right track.
Asset bubble bursting events are deflationary. The demographic cycle is deflationary. The global slowdown, especially in China and Europe is deflationary. The huge jump in retail store closings is deflationary. The auto and housing trends are deflationary.
Finally, Trump's tax cut stimulus is about over already. Some of these wage gains are related.
If one believes we are late cycle and a recession is coming bet on Achuthan.
Mike "Mish" Shedlock