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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
FED
An essay by Richmond Fed Pres Barkin (2021 FOMC voter, leans hawk) published today points to multiple possible reasons why wage growth hasn't taken off strongly despite businesses "struggling to find workers".
- He says businesses may expect labor supply to only be temporarily suppressed, so are holding off on "sticky" wage increases (as opposed to making one-off signing bonuses); and there may be limitations on what the data can show us so far.
- Additionally, there could be a composition effect, with lower-skill jobs that were hardest-hit in the pandemic bouncing back with large wage gains this year, whereas it's been more subdued for higher-skill jobs which were relatively unaffected in the first place.
Barkin "won't venture to predict the future" of wage growth, but is watching three factors over the coming months (a period of time which will be essential for the Fed tightening timeline):
- "Concentration: Does wage pressure stay concentrated in the lower end of wages, or does it start to put pressure further up the wage ladder?
- "Duration: Will "temporary" factors such as health concerns and school closures disappear, freeing up labor supply, or will their impact linger? Will announced entry-level wage increases pressure others to do the same?
- "Policy: Will the impact of policy on labor supply subside at the end of the summer? Or will additional policy impacts be felt on the demand side, for example via infrastructure spending, or on the supply side, via the forthcoming monthly child tax credit or minimum wage legislation?"
Source: Atlanta Fed
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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