As this is more or less the figure thatallows stabilising the unemployment rate,while the labour participation ratio wasunchanged (62.8%), the rate ofunemployment remained below 5% (4.9%).This highlights a strong labour market. Still, whether the US is in full-employment or not remains an open question. Since last October, the unemployment rate fluctuates within the estimation range of the NAIRU (Non-Accelerating Inflation Rate of Unemployment, estimated between 4.6%and 5% by FOMC members). However,wages are still not on a sustained upwardstrend. For the core of US workers (non supervisory production employees of the private sector) average hourly earnings were up by 2.5% y/y in August, a stable rate since last December. This lacks of wage inflation is puzzling with such a low rate of unemployment rate. However, if instead ofthe U3-measure of unemployment, a broader measure is considered, the flatlining of wage growth makes perfect sense (see chart). The U6-measure (which adds marginally attached workers and those employed part-time for economic reasons to unemployed) remains almost two points above its pre-crisis low, meaning that there still is a large pool of available workers, which caps the increase in earnings.
Alexandra Estiot
