United States: faster wage growth

October’s job report showed that the US has added another 161,000 new jobs, a respectable level that increases the likelihood of a December rates rise.

Although the average number of job creations over the last six months is below that of previous years (170,000 compared with over 200,000), it exceeds the 75,000-100,000 jobs needed to lower unemployment.

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Our analysis

Despite job creations remaining high, unemployment has only fallen slowly in 2016 (4.9% in October versus 5.0% in December 2015) as new labour market entrants have driven the participation rate higher. At 62.8%, this rate is expected to remain stable for several months before demographics push it back down. At current job creation levels, the unemployment rate should edge lower and labour market tightening is set to continue.

At 2.8% year-on-year, hourly earnings rose more than at any time since 2009. Given the tensions in the labour market where the offer-to-applicant ratio has returned to the record levels last seen at the start of the 2000s, wages should continue gaining pace.

The opinion expressed above is dated November 7th, 2016 and is liable to change.

This document is not pre-contractual or contractual in nature. It is provided for information purposes. The analyses and descriptions contained in this document shall not be interpreted as being advice or recommendations on the part of Lazard Frères Gestion SAS. This document does not constitute an offer or invitation to purchase or sell, nor an encouragement to invest. This document is the intellectual property of Lazard Frères Gestion SAS.


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Julien-Pierre Nouen

Directeur des études économiques et de la gestion diversifiée