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“Wage growth, as measured by average hourly earnings, decelerated to a 4.73% year-over-year rate, compared to 4.98% in September. This was the slowest rate of growth since August 2021,” Kan noted. “The easing in wage growth might help reduce some inflationary pressure, but we expect the Federal Reserve to continue its current course of policy tightening until there is broader evidence of cooling inflation.”
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Most of the job gains occurred in the health care (+53,000), professional and technical services (+43,000), and manufacturing sectors (+32,000). Meanwhile, construction employment was essentially flat over the month, consistent with the slowdown in the home building sector.
“While job growth remains strong, labor tends to be a lagging indicator of the general health of the economy (i.e., before past recessions, it was common for the economy to continue to add jobs even as signs of a slowdown were present elsewhere),” said Nathaniel Drake, analytics associate at Fannie Mae’s Economic and Strategic Research Group. “Therefore, while we do expect job gains to slow through the end of the year, we forecast that the economy will not begin losing jobs on net until next year.
“While robust labor demand remains good news for workers, given both the abysmal productivity growth seen this year, as well as the ongoing imbalance with labor supply, wage growth continues to run above levels that are consistent with 2% inflation. We believe this is likely partially responsible for why the FOMC now believes the terminal federal funds rate will need to be higher than they had previously projected.”
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