This morning the Labor Department announced that payrolls expanded by 266,000 in November, well ahead of estimates. Just as important, the previous month’s jobs were revised upwards to 156,000 and the unemployment rate matched the 50-year record low of 3.5%. Average hourly wages also expanded 3.1% signaling that consumers’ wallets are gaining on the overall economy. Hiring momentum is no doubt strong and is outpacing growth in the labor force. While this is good for employees currently, continued wage inflation may cut into future corporate profits. The low inflation environment may make it difficult for companies to raise prices as wage pressures may crowd out margins. [chart courtesy Bloomberg LP (c) 2019]
