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Fewest US small companies plan to raise pay since January 2014

Tuesday, July 14, 2015 - 18:28

[NEW YORK] Small companies in the US see wage growth slowing in coming months after a net 21 per cent said in June that they recently boosted worker compensation.

A net 11 per cent of managers last month said they plan to increase pay, down 3 percentage points from May and the fewest since January 2014, according to the seasonally adjusted results of 620 responses in a survey by the National Federation of Independent Business.

The last time plans for raising wages was lower was in October 2013, when 10 per cent of business owners said they planned on higher pay. In May, a net 25 per cent said they recently boosted worker compensation.

The group's index of small-business optimism fell to 94.1, the worst reading since March 2014, from 98.3 in the previous period. The 4.2 point drop was the biggest since November 2012.

The survey by the NFIB, a lobbying group that says it has 350,000 small and independent business owners as members, was a leading indicator of national wage growth until 2012, when the correlation broke down. Since the start of 2013, the percentage of smaller companies preparing to increase pay has been as low as 6 percent and as high as 17 per cent.

Average hourly earnings reported by the Labour Department advanced 2 per cent in June from a year earlier, compared with 2.3 per cent in the 12 months ended in May.

BLOOMBERG