Survey finds that Executives plan to put cash into capital investments, cash reserves and employee training, not salaries.
October 03, 2018
Consulting firm survey finds firms more likely to invest tax law gains in training than salary bumps. New data from consulting firm Korn Ferry found just 14% of surveyed executives planned to put tax benefits into salary increases, for fear of increasing fixed labor costs. Executives instead, according to the survey, planned to put cash into capital investments, cash reserves and employee training (in order of frequency). Economic data have revealed that inflation adjusted wages have barely risen this year, meaning the economic boom is likely failing to reach workers’ pockets. Some companies are instead issuing one-time bonuses, fearing that increasing base salary will threaten their businesses when the current economic climate changes. [WSJ]
Trump administration finds military depends on foreign suppliers for many materials. The administration’s survey, to be published in the coming weeks, has found hundreds of instances where the US military relies on foreign supplies for critical components, such as micro-electronics. The report will likely further inflame the US’ trade conflict with China. The study is designed to bolster support for the administration’s Buy American initiative, and could result in new defense supplier policies to try to support these industries domestically. [Reuters]
Economic Indicators and News
Private payrolls up 230,000 in September in ADP data. Private payrolls rose far above analyst expectations by 230,000 in the month of September, exceeding 185,000 expected jobs and August’s 168,000 figure. Moody’s economist Mark Zandi indicated the data likely demonstrate 3% unemployment in 2018, with payrolls rising at their fastest rate since February. Zandi also indicated the economy was at risk of “overheating” given the data. [CNBC]
Brent crude highest since 2014 on sanctions. Brent crude prices leapt to a four year high as investors took stock of upcoming Iran sanctions curtailing global supply, despite higher build (stockpile) numbers. While Russia and Saudi Arabia struck a deal last month to attempt production increases to curb rising prices, but analysts indicate these efforts will likely be in vain, as Saudi Arabia and other OPEC countries have spent much of last year restricting supply and will likely fail to oversupply sufficiently to dent prices. [Reuters]