survey points to rising U.S. wage pressures
Send a link to a friend
[July 21, 2014]
By Lucia Mutikani
WASHINGTON (Reuters) - The share of U.S. companies
raising wages more than doubled in the three months to July from a
year ago, a survey showed on Monday, suggesting a faster pace of
The National Association for Business Economics' (NABE) latest
business conditions survey found that 43 percent of the 79
economists who participated said their firms had increased wages.
That compared to only 19 percent last year and marked an increase
from 35 percent in the three months to April.
"For the third survey in a row, an increasing share of panelists
reported rising wage costs last quarter," said NABE President Jack
Kleinhenz, who is also chief economist at the National Retail
It was the first time since October 2012 that no respondents
reported declining wages at their firms. The economists represented
a broad spectrum of businesses, including goods-producing,
transportation, finance and services industries.
Forty percent of the firms employ more than 1,000 people.
The NABE survey is the latest to suggest an upturn in the wage
cycle. The National Federation of Independent Business (NFIB)
survey's compensation index is hovering at a six year high. This
index has been trending higher since late 2013 and is closely
correlated with a broader measure of wage growth.
While Federal Reserve Chair Janet Yellen maintains wage growth is
still a long way from igniting inflation, the anecdotal evidence of
faster wage growth has some economists worried the U.S. central bank
could be slow to raise interest rates and end up with an inflation
In the July quarter, the NABE showed 59 percent of respondents in
the finance, insurance and real estate sector reported raising
wages. In the transportation, utilities, information and
communications sector, half of the respondents said they had
In the services sector, 35 percent reported wage increases, while in
the goods producing sector the share was 11 percent.
[to top of second column]
"It's not surprising that we would see some reporting of rising wage
costs. As we get to the point where we have less in the labor market
to supply, I think firms are recognizing that's something that they
have to do," said Kleinhenz.
"If there has been a chronic shortage of supply for skilled labor,
you may need to raise wages for certain occupations."
Wage growth expectations for the third quarter's growth were a bit
lower, with 35 percent of respondents expecting increases. None,
however, anticipated a decline in wages.
The share of businesses increasing employment jumped to 36 percent
in the July quarter from 29 percent a year ago. That was up from 28
percent in the April quarter.
While the share of businesses reporting they could not find
qualified workers slipped three-tenths of a percentage point to 22
percent, skills shortages remained the dominant theme.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)
[© 2014 Thomson Reuters. All rights
2014 Reuters. All rights reserved. This material may not be
published, broadcast, rewritten or redistributed.