Why Morgan Stanley Threw Up All Over Those “Great” Rising Earnings

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zerohedge.com / by Tyler Durden / Jan 9, 2017 2:19 PM

Following last Friday’s disappointing payrolls report, the punditry was understandably focused on the silver lining: the 0.4% monthly jump in average hourly earnings, which translated into a 2.9% annual increase in hourly earnings – the hottest since the financial crisis. The strong increase in earnings was quickly interpreted by the sellside as the latest indication rising inflation has arrived, and that more rate hikes are imminent.

Alas, that was only part of the story.

As we showed shortly thereafter, the reality is that the wage growth had mostly benefited supervisory and management level workers – who comprise only 18% of the labor force – and whose average hourly earnings soared by a record 4.7% Y/Y. Meanwhile, the earnings of the vast majority of US employees, those production and non-supervisory workers who make up 82% of the workforce, remained stuck in the doldrums, rising by a far less exciting 2.5%, or the same growth rate observed for the better part of the past 3 years.

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