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The US economy has created 250,000 jobs in October, the unemployment rate remained at 3.7%, said Friday the Department of Labor. Wage growth, the key figure for investors worried about the Fed's rate hike, has accelerated more than expected to 3.1%, its fastest pace since early 2009. The growth momentum wages virtually blocks further Fed rate hike in December.
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Wall Street economists estimated 190,000 jobs, 3.7% unemployment and 3% growth in average hourly wages.
Before the Fed meeting on December 18 and 19, there is still a report on jobs, but the sharp rise in wages announced by Amazon (AMZN) last month should ensure that wage growth does not relapse in the next report.
After the jobs data, the futures on the Dow Jones and S & P 500 were based on mixed reports hinting hopes for a trade agreement between the United States and China. Apple (AAPL) weakness. But in the middle of the morning, the Dow Jones yielded 0.1% and the S & P 500, 0.3%, while the Nasdaq lost 1% in reaction to Apple's profits and the controversial announcement of his iPhone. The 10-year Treasury yield, which rose 3.17% ahead of data, was 3.18%.
The economy has created 32,000 manufacturing jobs, as the industry faces uncertainty and rising prices from Trump's tariffs and a possible escalation of the trade war in China.
The rise in Amazon's wages started on November 1st
On October 2, Amazon adopted a minimum wage of $ 15, responding to political pressures. Then, under the pressure of the fallout from moderate-income employees, Amazon raised the wages of those who earned nearly $ 15. The wage increases were to come into effect on November 1.
The acceleration of wage growth will keep up the pressure for further Fed rate hikes. The Fed generally subscribes to the theory that declining unemployment leads to faster wage growth, which translates into higher inflation.
While October's 250,000 payroll gains may have partly reflected a rebound in hurricane weakness in September, payroll wage gains averaged 218,000 per month over the last three months. month.
In advance, the financial markets were expecting a 74% rate hike in December. This increased to 77.5% after the data.
Restaurants, Retailers, Microsoft Increase salary
This week's earnings reports provided more evidence that wage pressures are finally rising. Texas Roadhouse (TXRH) reporting a wage inflation of 5.3%. President Scott Colosi said at a call for results that "competition for employees and wage pressure on wages are more intense than those they (the leading partners) can remember and that it seems likely to continue in 2019. "
Other evidence of widespread wage pressures in recent months include: Microsoft (MSFT) has reportedly recently distributed six-figure bonuses against competition from cloud computing employees. Costco (COST) increased his starting salary from $ 1 hour to hour in June. Cheesecake Factory (CAKE) said its wage growth had jumped from 6% to 7% from expectations of 5% previously. Walt Disney Florida amusement park workers (DIS) recently approved a contract for a 50% increase in the starting salary to $ 15 over three years.
The recent weakness of the stock markets is particularly concerned that the Fed will go too far in raising rates in the face of slowing global economic growth, the escalation of the trade conflict with China and the gradual disappearance of fiscal stimulus resulting from lower taxes in the United States. wage growth will keep the economy strong or if employers facing margin pressures will reduce hiring given the prospect of rising rates, trade uncertainties, slowing global growth, strong dollar pressures in emerging markets, end-of-cycle fears and possibly weak financial markets
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