In July 2024, the percentage of U.S. small businesses increasing wages dropped to its lowest level in over three years, signaling a further easing of inflationary pressures related to the labor market.
▪️ Decrease in Wage Increases According to the National Federation of Independent Business (NFIB), only 33% of U.S. small businesses reported raising employee compensation in July, down 5 percentage points from June, marking the lowest figure since April 2021.
▪️ Easing Inflationary Pressure This data suggests that inflationary pressures in the labor market are beginning to diminish, which could influence future decisions by the Federal Reserve regarding interest rates.
▪️ Labor Market Despite the overall slowdown in wage growth, the labor market remains tight, but the decline in the number of companies raising wages may indicate a shift toward stabilization.
▪️ Outlook for Small Businesses Small businesses continue to face challenges, including high labor costs and ongoing inflationary pressures, which affect their ability to increase compensation.
This data underscores the importance of closely monitoring current economic conditions and their impact on the U.S. labor market and inflation.