Wages Shine at End of 2016

By Toni Vranjes

January 6, 2017

Wages rose by 10 cents in December – a 2.9 percent gain over the year, the Labor Department reported today.

In addition, employers added 156,000 new jobs, boosted by health care, food services and drinking places, and social assistance. That payroll figure is down from 204,000 in November, according to revised numbers released by the government.

The unemployment rate increased from 4.6 percent to 4.7 percent, driven by an increase of 184,000 in the labor force.

In an analysis, IHS Markit Chief Economist Nariman Behravesh wrote that job creation is trending downward. On average, payrolls rose by 165,000 each month from October through December, compared to 212,000 for July through September.

But this downward trend isn’t a negative, Behravesh observed. “With the economy at or near full employment, this is not a bad thing, especially if labor productivity growth strengthens,” he wrote. “The jobs gains of the last two years cannot be sustained without seriously straining the job market.”

Another trend is upward wage inflation, he added. The 2.9 percent wage increase was the largest increase in seven years.

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