While the July unemployment numbers have been encouraging, (163,000 new jobs added, overall), given the fact that there was a seasonal adjustment of 350,000 jobs in the month and that the revision of provisional numbers has historically witnessed an average correction factor of 100,000 jobs, there is indication that we may need more caution to read the job numbers as anything but accurate or sustainable at this point. Seemingly counter-intuitive, but justi?ed by seasonal adjustment, is also the fact that unemployment actually rose marginally during the period from 8.2% to 8.3%.
Wages are in a stagnant zone in the long-run even though cyclical seasonality in trends is likely to continue. Spurred by educational sector hiring after the school summer break, Q2 and Q3 are expected to continue to have increased demand and consequential rise in wages, albeit marginal.
From current DCR index levels of 115, the DCR National Temporary Wage Index is expected to go up marginally to 120 over the Jul-Sep Quarter and hover around that level. It is also expected that in November, post presidential elections, the job market will lag and wage rates could drop to riding on weakened demand, the seasonal holiday demand notwithstanding.
Sector-wise trends vary slightly despite overall stagnancy in wages. Weakness in wages in the Defense and Aerospace sector is likely to continue till end of the year. Manufacturing has a bumpy ride too and its slow growth would also come under pressure for temporary worker wage rates.