Wage cost growth in the US is weakening. And with them inflationary pressures

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Labour costs are one of the key factors influencing future inflation. If wages were currently rising at a similar rate to prices, it would take much longer for wages to return to low, two percent inflation.

Decrease in labour costs

The U.S. Department of Labor has published up-to-date statistics on labor costs. They increased by 1.2 percent quarter-on-quarter in the third quarter, which is a slight decrease compared to the previous quarter. It also slowed year-on-year growth from 5.1 percent in the second to five percent in the third quarter.

Fed could reduce the pace of interest rate hikes

The development of labour costs is one of the closely watched indicators by economic policymakers. At the moment, he is probably most interested in the members of the Federal Reserve System, which decides on the setting of monetary policy or interest rates. The next monetary policy meeting is due in early November, and the Fed is widely expected to raise rates again by 0.75 percentage points. However, the latest data on labor costs give hope that the Fed could raise interest rates at a significantly more moderate pace at its December meeting.


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