All eyes are on wage growth.
After a year of record increases to keep up with inflation and recruit and retain workers amid one of the tightest labor markets, the Federal Reserve is holding out hope that employers will slow the growth of wage increases.
If that happens, the central bank may be able to slow the pace and size of its rate hikes intended to bring down inflation. That could even forestall a recession. Early signs of slower wage growth are starting to show up in job postings and government data. But it’s likely too soon for the Fed to take a victory lap.
Last month, average hourly earnings rose by $0.09 to $32.82. That’s a 53% decline in the pace of wage growth from December 2021 when average hourly earnings jumped by $0.19. On an annual basis, average hourly wages are up 4.6%, that’s one-tenth of a percentage point below the annual rate at the end of 2021.
As of November, wages for part-time and full-time workers were 6.2% higher than in 2021, according to the Atlanta Fed’s Wage Growth Tracker.
Data from job posting site Indeed paints a similar picture.
Wages for jobs posted on Indeed grew by 6.3% year-over-year as of December. That’s 3% higher than the pace of wage growth in 2019. But December’s data from Indeed is the ninth consecutive month of wage growth declines from March, when wages were on pace to grow by 9% annually.
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Overall wage growth is slowing across 80% of the industries Indeed tracks. The largest wage growth declines are occurring in low-wage sectors such as childcare and food preparation, according to a post authored by Nick Bunker, director of economic research at Indeed.
What does all this mean for 2023?
Bunker isn’t placing any bets saying, “the outlook for 2023 is still unclear.”
Elisabeth Buchwald is a personal finance and markets correspondent for USA TODAY. You can follow her on Twitter @BuchElisabeth and sign up for our Daily Money newsletter here
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