US Wage Growth: largely due to services-producing industries - NBF

The NFP report showed that wages in January rose at the fastest rate since 2009. National Bank of Canada’s analysts, Krishen Rangasamy, explained that wage growth picked up largely thanks to the service sector. 

Key Quotes:

“The U.S. employment reports for January were mixed, with a generally good establishment survey (a consensus-topping 200K increase for non-farm payrolls) but a less impressive household survey (just a 91K increase for employment after removing the effect of updated population estimates).”

“The reported increase in non-farm payrolls was not broad-based according to the slumping private sector diffusion index, while hours worked fell at the fastest pace in four years. But the FOMC, which wants to continue normalizing monetary policy, will focus on the positives including further jobs gains in cyclical sectors such as manufacturing and construction, and the acceleration of average hourly earnings in the private sector to 2.9% on a year-on-year basis, the highest since 2009. 

“The uptick in wage growth is largely due to services-producing industries which, with current technology, are less easy to automate than say goodsproducing industries.”