U.S. wage growth modest into 2016: Moody's Analytics

Average domestic wages to increase by 2.5 per cent in 2015

NEW YORK (Reuters) — U.S. wage growth will likely remain modest into 2016 even as employers ramped up their hiring in recent months, Moody's Analytics' chief economist Mark Zandi said Wednesday.

Zandi projected average domestic wages will likely increase at a 2.5 per cent pace in 2015 and three per cent in 2016, compared with the current two per cent rate.

While wage growth is expected to remain "spotty" in the next couple of years, there are signs of rising salaries in certain regions of the United States and high-paying sectors where the supply of qualified workers is becoming scarce, Zandi said during a conference call with reporters.

The pace of pay increases is expected to accelerate when the economy achieves full employment, which he expects will occur in 2016. "That's when wage growth will really pick up," he said.

Earlier, the ADP National Employment Report, which Moody's jointly developed with ADP, showed the U.S. private sector added 281,000 jobs last month, the biggest monthly rise since November 2012.

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