But wages are only part of the picture. A combination of factors are driving up input costs for businesses, including high prices for materials and ongoing supply chain challenges. S&P Global’s gauge of input prices surged to a record high this month.
Looking ahead, a tight job market could keep wage growth on the boil. Labor shortages have eased somewhat, but the leisure and hospitality sector is still grappling with 1.7 million vacancies.
Companies in recent earnings calls have also noted the ongoing war for talent. John Greene, chief financial officer of Discover Financial Services, said Thursday that the company expects “some degree of salary wage pressure in 2022 and possibly into 2023 as we take steps to remain competitive.”
But the economy is facing growing headwinds. Recession odds are creeping higher amid expectations the Fed will move aggressively to get a handle on red-hot inflation. And the latest figures on economic growth were weaker than expected. As a result, wage gains may moderate in the months ahead.
--With assistance from Jordan Yadoo and Catarina Saraiva.
This article was provided by Bloomberg News.