In the underlying details on wage growth, the low print in average hourly earnings reflected calendar-driven volatility in a number of sectors, particularly high wage sectors that would have weighed heavily on the aggregate figure. For example, earnings in financial activities fell 0.19% on the month, but that followed an elevated +0.61% reading the prior month; similarly in information services, earnings fell 1.22% on the month, but that followed a +1.12% reading in August; and earnings in utilities fell 0.36% in September after a 0.96% increase in August. Similar dynamics were seen in a number of middle-wage industries as well, like education & health services, construction, and wholesale trade.
Importantly, wage growth in low wage industries continues to climb higher, with broad based increases across the low wage segments in September. That’s a very positive development in the underlying labor market dynamics and something that Chair Powell has flagged regularly as a very positive development as well.
Put together, wage growth in low wage industries rose to 3.62% from 3.56%, wage growth in middle-wage industries fell to 2.125% from 2.47%, and wage growth in high-wage industries fell to 3.17% from 3.50% (Exhibit 3).
With the mix of wage pressures skewed towards the low end, the median rate of wage growth across industries actually increased in September, to 3.1% from 3% (Exhibit 4), with the positive spread between median and average rates of wage growth consistent with this lower wage skew.Exhibit 3: Wage Growth in Low-Wage Industries Remained Solid
Source: Bureau of Labor Statistics, Morgan Stanley ResearchExhibit 4: While Wage Growth in Low-Wage Industries Took a Step Down in August