US labor market tightness likely to lead to modest wage increases

The US' National Federation of Independent Business (NFIB) index of small business optimism grew in December to 95.2 from November's reading of 94.8. Intention to employ increased strongly to 15% in December, as compared with 11% in November. The labour market in the US continues to tighten as companies reporting positions not able to currently increased to 28% in December, as compared with 27% in November. Planned compensation growth continues to be at 20%.

Meanwhile, real sales outlook bolstered, rising 8% in December, as compared with a drop of 1% in November. However, the total economic outlook weakened by 14%, as compared with -7%.

"We expect labor market tightness will give way to modest wage increases, which the NFIB survey suggests may already be underway", says Barclays.