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.
In the services sector, 35 percent reported wage increases, while in the goods producing sector the share was 11 percent.
“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