Wages are going up and workers are harder to keep.
In the Fed’s latest Beige Book, respondents in basically all of the Fed’s 12 districts reported wage pressures during the months of April and May.
From the Fed:
Slight growth in wages was reported by most districts. A tight market for skilled construction labour in the Boston, Dallas, and San Francisco Districts pushed up wages for workers there, and staffing services firms in Boston, New York, and Dallas noted rising wages. The Richmond, Kansas City, and San Francisco Districts noted higher wages in the restaurant and/or hospitality industries. Some contacts in the IT sector in the San Francisco District reported rapid wage gains, and their counterparts in Boston noted rising wages as well. Employers in the Atlanta District were monitoring how recent minimum pay announcements from a number of employers would affect local labour markets. Contacts across various industries in the Chicago District reported a willingness to raise wages when necessary to attract and retain workers, and a notable share of reporting firms in the Minneapolis District also said they were increasing starting pay for most job categories to attract new hires.
And outside of specific wage pressures, there are indications from some essential sectors of the economy, notably trucking, where there is either a shortage of workers or clear plans to increase staffing.
Moreover, one of the most bullish signs for employment — difficulty for employers to retain talent — is cropping up in more and more places.
Here’s the Fed again:
An ongoing and widespread shortage of truck drivers was noted in the New York, Cleveland, and Kansas City Districts. Firms in the Cleveland, Atlanta, Chicago, and Minneapolis Districts reported difficulty retaining employees. The New York District said a sizeable proportion of service-sector firms plan to expand employment in the months ahead.
On Friday, we’ll get the latest report on employment from the BLS, with Wall Street expecting nonfarm payrolls to rise by 227,000 while the unemployment rate is expected to remain steady at 5.4%.
And while the headline employment numbers will be a major factor in the Federal Reserve’s thinking as it continues to eye an interest rate hike at some point this year, the market will continue to keep an eye out for signs that these pressures start to show up in the official data.
Earlier this week we highlighted the uptick in firms mentioning wage pressures in the Fed’s Beige Book, and it doesn’t look like Wednesday’s report is going to change this trend.