January 2018 saw 200,000 new jobs added in the U.S., and the fastest yearly pace of wage increases since 2009, exceeding forecasts from Wall Street. Unemployment remained at a 17-year low of 4.1 percent.
Construction companies added 36,000 jobs last month, and manufacturers increased employment by 15,000 despite the critical labor shortage that is still causing concern for many businesses, MarketWatch reports. Dan North, chief economist at Euler Hermes North America Insurance Company, says that the tight labor market has caused many manufacturers to hire unskilled workers at low wages, and people with criminal records would have been ruled out in years past.
“The faster pace of wage gains indicates that the labor market is tightening, with employers having to pay higher wages to get the workers they want,” said David Berson, chief economist at Nationwide. “In short, the labor market is tight, getting tighter, and employees are becoming more expensive,”: said Ian Shepherdson of Pantheon Macroeconomics. “The question for the Fed now is whether the plan for gradual tightening [in interest rates] will be enough if wage gains accelerate further.”
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