Wage Growth Year-Over-Year Above 3% for Eighth Straight Month in March

Wage growth exceeded 3% for the eighth straight month in March, the Bureau of Labor Statistics (BLS) reported Friday. It’s the latest indicator the labor market remains strong, and backs up other positive data.

The Employment Situation, more commonly referred to as the monthly jobs report, beat expectations for the top-line employment gain. The consensus forecast was looking for 170,000, ranging from a low of 145,000 to a high of 218,000.

“The March jobs report exceeded expectations with 196,000 new jobs created,” Secretary of Labor Alexander Acosta said in a statement. “Adding upward revisions of 14,000 jobs from the past two months, means that more than 5.1 million jobs have been created since January 2017.”

The consensus forecast for annual gains to average hourly earnings (wages) was 3.4%, ranging from a low of 3.1% to a high of 3.9%. Average hourly earnings (AHE) rose 4 cents to $27.70 after a 10-cent gain in February.

Over the past 12 months, average hourly earnings have increased by 3.2%. While that slightly missed the forecast, real upward wage pressure began in the fourth-quarter (Q4) 2018, and has remained solid and consistent.

“American workers are increasing their productivity, and paychecks are rising,” Secretary Acosta added. “Year-over-year wage growth was 3.2%. For eight straight months, year-over-year average hourly earnings growth eclipsed 3.0%.”

“With healthy job growth, rising wages, and low unemployment, we continue to work to increase labor force participation to fill high levels of open jobs.”

The Labor Department (DOL) Employment Cost Index reported a 3.1% increase in January 2019, marking the first time in more than a decade that wages and salaries broke 3%.

Independent analysts noted the biggest positive in this report is that there is still a significant amount of upward pressure on wages.

“While there was understandably some nervousness following the significant ‘miss’ last month, and the shortfall from the ADP private sector report on Wednesday, markets will take this as a very reassuring report,” Tim Anderson, market analyst at TJM Investments said.

“There’s more room for wages to grow.”

The Survey of Consumers also showed significant acceleration for consumer sentiment in March, rising to 98.4 to beat the high end of the forecast range. But the gain for the month was fueled by increased optimism among working Americans.

Mr. Curtain noted historical data on expected income gains (chart below) do not indicate an emerging recession.

“Middle and lower income households more frequently reported income gains than last month, although income gains were still widespread among upper income households,” Richard Curtain, the chief economist for the Survey of Consumers said. “Indeed, the last time a larger proportion of households reported income gains was in 1966.”

Meanwhile, initial jobless claims fell another 10,000 to a seasonally adjusted 202,000 for the week ending March 30, the lowest level since December 6, 1969. That day weekly jobless claims came in at 202,000, as well.

The consensus forecast was 216,000, ranging from a low of 215,000 to a high of 222,000.

The week of December 6, 1969, had been cited as the benchmark low in previous weekly jobless reports under this administration–here, here and here–but it was the first time it mirrored the 202,000.

The 4-week moving average fell by 4,000 to just 213,500 from the previous week’s revised average.

The advance seasonally adjusted insured unemployment rate was unchanged at a very low 1.2% for the week ending March 23, while the advance number for insured unemployment (SA) declined by 38,000 during the week ending March 23 to 1,717,000.