Employment Statistics July 2022 A bit odd, but wages continue to rise steadily (1)
What the Fed is currently watching most closely is the wage growth rate.
To see the turning point sooner, the month-over-month figure is the most watched, but because the fluctuations are large, the three-month change is checked in the same way. And to monitor the trend, the year-over-year comparison is fundamental.
Regarding wage data, there are two kinds: what used to be called blue-collar data (now not used as much) and the data for all workers.
Now the all-workers data is emphasized (in the past there was only blue-collar data), but I think the Fed internally looks at the blue-collar data.
Wage growth rate month-over-month
Wage growth rate three months ago
Wage growth rate year-over-year
Compared to prices
The market currently expects: rate hikes → economic slowdown & price containment → rate cuts, and is watching for signs of economic slowdown (slower job growth and slower wage growth). Therefore, it will react vividly to changes in job gains, but as a trend, unless wage growth falls below 3%, the path toward further rate hikes remains. Until wage growth falls below 3%, the road ahead will still be long.
