"Weakening Wage Growth in the US...Sustained Increases Difficult"

[Image source=Yonhap News]

[Asia Economy Reporter Park Jihwan] An analysis has emerged that the wage growth, considered the most important variable in determining the monetary policy direction of the U.S. central bank, the Federal Reserve (Fed), is weakening. As the wage growth rate stabilizes and concerns about inflation ease, it is expected that the Fed's tightening pace will likely proceed more slowly than anticipated.

Researcher Lim Dongmin of Kyobo Securities said on the 2nd, "In December last year, U.S. nonfarm employment increased by 400,000," and "the headline unemployment rate fell to 4.1%." The labor force participation rate rose to 61.9%, and the U.S. employment market is evaluated to be continuing its recovery in terms of direction.

During the 2020-2021 COVID-19 pandemic, the U.S. labor force participation rate declined. Under the With-Corona situation, the willingness to employ in face-to-face services retreated, resulting in a slower employment recovery than expected.

Researcher Lim said, "In December last year, the average hourly wage in the U.S. is expected to have increased by 4.2% compared to the previous year," adding, "During last year's With-Corona period, wage growth accelerated sharply due to a lack of employment participation in the face-to-face service sector, but wage growth has shown a weakening trend after peaking in the fourth quarter." He emphasized, "Despite structural changes in the U.S. employment market, wage growth cannot be sustained."

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