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Macro Since The Jan FOMC: Labor - Wage Growth Distortions [3/4]

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  • Average hourly wage growth meanwhile has swung in the past two months in what we see as weather disruption, surging 0.52% M/M in Jan before 0.145% M/M in Feb.
  • We expect the March data will be required for a better idea of latest growth in a more ‘normal’ month.
  • Productivity growth has continued to offer a dovish counterpoint though, again surprising to the upside by rising 3.2% annualized in Q4 as it continues an extremely strong patch which has helped make recent wage growth rates increasingly compatible with the inflation target.
  • Indeed, unit labor costs increased an average of just 0.2% annualized in 2H23.

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