"With employment growth continuing to show moderate declines, we're seeing first-hand the impact of the tightening labor market on small businesses".
The strong jobs market is gradually putting upward pressure on compensation, with other data on Wednesday showing a solid increase in labor costs in the third quarter.
Benefits increased 2.5 percent in the private sector, the Bureau of Labor Statistics (BLS) reported October 31. "Wage growth is likely to be over 3 percent again soon".
The Present Situation Index - based on consumers' assessment of current business and labor market conditions - turned in an even bigger gain, rising from 169.4 to 172.8. But with employers increasingly desperate for workers, they are being forced to offer higher wages.
A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they can not find full-time employment, fell one-tenth of a percentage point to 7.4 percent, matching a 17-year low hit in August.
Nonfarm payrolls increased by 250,000 jobs last month as employment in the leisure and hospitality sector bounced back after being held down by Hurricane Florence, which drenched North and SC in mid-September.
According to a Reuters survey of economists, nonfarm payrolls probably rebounded by 190,000 jobs in October after Florence depressed restaurant and retail payrolls in September.
Last month, employment in the leisure and hospitality sector increased by 42,000 jobs after being unchanged in September.
In the breakdown of the index, private-sector wages and and salaries jumped 3.1 percent over the 12-month period ending in September, the biggest annual increase since 2009. The ECI is widely viewed by policymakers and economists as a reliable predictor of core inflation. Unemployment is at a 49-year low and there are more job openings than unemployed Americans, which forces companies to fight for available workers. Businesses are staffing up at a rapid pace in response to healthy consumer spending and strong economic growth.
"Broadening wage pressures across industry groups and across the pay scale are helping to drive sustained gains in wages for workers", said Ellen Zentner, chief economist at Morgan Stanley in NY. State and local government workers saw their wages rise 2.5 percent over the past year.
Fed Chairman Jerome Powell is expected to approve another rate hike in December. They were up 2.6 percent in the 12 months through September after rising 2.9 percent in the year to June. Most of the wage growth in the Employment Cost Index is coming from service-sector jobs.
U.S. wages and salaries rose by the most in a decade while private sector payrolls increased by the most in 8 months in October, suggesting overall job growth accelerated this month after Hurricane Florence weighed on restaurant and retail employment in September. This article is strictly for informational purposes only.