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Good morning. Today we look at rising wages, signs the labor market has further to run, a hiring frenzy for $300,000-a-year jobs, where foreign students work, and how the U.S. Treasury is adding to its growing pile of debt.
PAY DAY!
Americans paychecks rose at the fastest rate in more than a decade over the past year, showing a tight labor market is paying dividends for more workers, Eric Morath reports. The latest wage data comes from the slightly obscure employment-cost index, which accounts for both wages and benefits paid to civilian workers. A more closely watched pay gauge—average hourly earnings for private-sector employees—is out with the October jobs report on Friday. It’s expected to rise just more than 3% from a year earlier, which would be the strongest increase since 2009.
Clearly, a tighter labor market is forcing employers to compete for workers by offering higher pay. The big question: Will higher wages lead to more inflation? So far the evidence is mixed. Official gauges show inflation cooling in recent months. Private-sector companies, though, say they’re starting to pass higher labor and material costs on to customers.
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WHAT TO WATCH TODAY
The Bank of England releases a policy statement at 8 a.m. ET, followed by a press conference at 8:30 a.m. ET.
U.S. jobless claims, out at 8:30 a.m. ET, are expected to remain at a low level.
U.S. productivity for the third quarter, out at 8:30 a.m. ET, is expected to rise at a 2.3% pace.
Markit’s manufacturing purchasing managers index for October, out at 9:45 a.m. ET, is expected to tick down to 55.8 from 55.9.
The Institute for Supply Management’s manufacturing PMI for October, out at 10 a.m. ET, is expected to slip to 59.0 from 59.8 a month earlier.
U.S. construction spending for September, out at 10 a.m. ET, is expected to rise 0.1%.
U.S. auto sales for October are expected to decline to a 17.1 million annual pace from 17.4 million a month earlier.
TOP STORIES
SLACKERS
Why are wages rising? Well, the unemployment rate is the lowest in half-a-century and the economy has churned out jobs for a record 96 (soon to be 97) straight months. Workers are getting scarcer, so companies either have to pay up or lower standards and train more. Could employers actually run out of workers? Probably not any time soon. Here are a couple signs there’s still slack in the labor market.
Hours. In September, nonsupervisory workers were on the job an average of 33.7 hours a week. That’s been close to the ceiling since the turn of the century but below levels from the 1990s and earlier. That suggests employers could ramp up hours if they needed more help.
Part timers. Hours are short in part because there are so many part-time workers. The number of people who are part time but want a full-time job remains elevated.
A steadily improving job market has wrung out some slack, pushing the number of involuntary part-time workers down to 2.7% of the overall workforce this summer. That was the lowest rate since late 2006 but still not as low as it was a couple decades ago.
“The low level of average hours and the elevated rate of part-time work are both signs the labor market has room to run,” says Nick Bunker, economist at jobs website Indeed.com.
WHERE TO FIND $300K/YEAR JOBS
An industrywide scramble is under way this week to hire young investment bankers. Private equity’s annual recruitment is a frenzied window of interviews and fast-expiring job offers that firms use to fill their junior ranks. The candidates graduated college as recently as last spring and landed at Wall Street investment-banking desks just weeks ago. Those lucky enough to get offers will finish their two-year bank analyst programs and start at private-equity firms in the summer of 2020, with salaries that can exceed $300,000, Liz Hoffman and Miriam Gottfried report.
WHERE ARE ALL THE FOREIGN STUDENTS?
U.S. immigration officials released never-before-seen details about where many of the nation’s international students attend school and gain employment after graduation. The new records show 433,556 foreign graduates were cleared for temporary jobs in their academic field after finishing school in 2017—the equivalent of roughly half the total population of international students seeking U.S. degrees, Kelsey Gee reports.
Global technology firms like Amazon.com and Google are among the most prominent employers of international students, nearly half of whom hail from India and China. Many of the students’ top recruiters also sponsor a large share of H-1B visas for their foreign workers, which allow for longer-term employment.
PILE ON THE DEBT
The Treasury Department is boosting the size of its debt auctions to meet funding needs caused by swelling budget deficits and a shrinking Federal Reserve portfolio. Debt levels are rising at the same time the Federal Reserve is raising interest rates—factors that have led bond yields to rise and prices to fall in recent months. Treasury issuance is testing investor appetite for U.S. government debt, and so far demand for the securities has held up.
The Treasury’s approach of slow, steady increases to auction sizes has mirrored the Fed’s gradual approach to raising interest rates, Kate Davidson and Daniel Kruger report. The predictable path of both policies has helped to limit volatility in the bond market, which has encouraged many people to continue investing even as bond prices have fallen, which pushes their yields higher.
QUOTE OF THE DAY
I didn’t want to be the spokesman against bitcoin. I don’t really give a shit, that’s the point, okay? Blockchain is real, it’s technology, but bitcoin is not the same as a fiat currency.—Jamie Dimon, chairman and CEO of JPMorgan Chase, speaking at an Axios conference
TWEET OF THE DAY
[wsj-responsive-sandbox id = "0" ]WHAT ELSE WE’RE READING
North Dakota’s fracking boom helped reduce crime. “Results indicate that the start of economic expansion–as signaled by the signing of leases–leads to a 22% reduction in criminal cases filed. Effects are smaller once the fracking boom escalates during the more labor-intensive period. This is consistent with improved economic opportunity reducing crime,” Texas A&M’s Brittany Street writes in a job market paper.
What happens when fathers take parental leave to look after their newborn babies? “We find that fathers’ parental leave-taking has significant influence on the time fathers dedicate to childcare and leads to a reduction of gender differences in housework. Both effects persist even after fathers return from leave. This documents the importance of the first few months after childbirth for shaping gender roles in childcare and in household production,” Marcus Tamm writes in an Institute of Labor Economics discussion paper.
UP NEXT: FRIDAY
U.S. nonfarm payrolls for October, out at 8:30 a.m. ET, are expected to rise by 188,000 from the prior month, and the unemployment rate is expected to hold steady at 3.7%. Here are five things to watch in the report.
The U.S. trade deficit for September, out at 8:30 a.m. ET, is expected to widen to $53.8 billion from $53.24 billion the prior month.
Canada’s employment report for October is out at 8:30 a.m. ET.
U.S. factory orders for September, out at 10 a.m. ET, are expected to rise 0.5% from the prior month.
from Real Time Economics https://ift.tt/2qppIBL
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