US wage growth at 6-year high; All eyes on US Fed

Registering highest growth rate since July 2009, the world's largest economy recorded 2.5 percent rise in wages in October.

In what could be a fresh breather for struggling Americans, the US economy added 271,000 jobs during the same month. The US unemployment rate eased to five percent, lowest since 2008.

The increased hiring activity may enhance the probability of interest rate hike by US Federal Reserve. The increased hiring of people has created more demand for talent and this is pushing wages northwards.

However, the latest 2.5 percent wage growth is still below the 3.5 percent benchmark of healthy growth set by US Federal Reserve.

Encouragingly, many part-time workers have got the full-time jobs. After the global financial crisis in 2008, the US employers were hesitant and unable to hire people on full-time basis owing to bleak economy conditions.

With the improving economic situation, the US companies and businesses have started hiring people on full-time basis. 

The US jobs report for October was encouraging for the Americans and rest of the world as the world's largest economy created 271,000 employment opportunities while the unemployment rate dropped to five percent and this is the lowest since 2008. 

US companies are not hesitating to pay more to keep the new employees from switching to competitors as the increased hiring activity has been creating more demand for skilled workers.

The US Federal Reserve has set a healthy growth rate of 3.5 percent as the benchmark. When compared with the US Fed's healthy state indicating benchmark, the latest wage growth rate of 2.5 is still hovering below this level.

The US Federal Reserve's scheduled for a crucial policy meeting during 15-16 December 2015. Economists and analysts are anticipating that the positive economy situation may influence the Fed to consider the interest rate hike.

The strong wage growth rate and improved hiring activity are the clear signals that US economy can withstand interest rate hike. 

The non-farm payrolls were up 271,000 in October, according to the US Labor Department. This is much better when compared to the combined 12,000 new jobs in September and August.

With the encouraging October report, the monthly average hiring activity for 2015 now stands at 206,000 jobs. The US officials expect the unemployment rate would be 4.9 percent by year end. 

The new jobs created during October were well above the market analysts' expectations of 182,000 jobs. Based on the previous months' estimates, it was anticipated that the US economy could support 12,000 more new jobs only. The number of part-time workers dropped to 250,000. 

In addition to this, the average hourly pay rose by nine cents per hour. The hourly average pay for the past one year rose 2.5 percent keeping ahead of inflation.

Economists opine that job gain is likely to be encouraging in November also and this would give much more flexibility to the US Fed to hike interest rate from near zero level.

The wage report for October was in line with the encouraging services sector and automobile sales data.

This is further indicating that US economic growth rate is increasing as the corporate activity is gaining momentum during the fourth quarter surpassing the 1.5 percent year-on-year rate recorded during July-September quarter.