NABE survey points to rising U.S. wage pressures

Mon Jul 21, 2014 12:55am EDT
 
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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 wage growth.

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 Federation.

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 problem.

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 increased wages.   Continued...

 
Two construction workers are shown standing on scaffolding at an apartment building under construction in Hollywood, California November 12, 2009. REUTERS/Fred Prouser