Added jobs point to firmer U.S. spending despite weak wage growth

WASHINGTON (Reuters) - For the American worker, sluggish pay increases have been a hallmark of the recovery from recession, and October was no exception. But it's also the case that an acceleration in hiring has made the total bill companies pay in wages grow more swiftly, which is a positive sign for consumer spending because it's putting more money in the pockets of households. Total payments to workers whose main job wasn't management rose 5.1 percent in October from the same month a year earlier, Labor Department data showed on Friday. The reading on total pay for production and non-supervisory workers has risen more than 5 percent in three of the last four months, the first time that has happened since 2007. Economists at Goldman Sachs have noticed this trend and said it is even more pronounced when taking the low rate of inflation into account. In a recent note to clients, they said the rise in aggregate income will likely list consumer spending. The size of a company's wage bills is determined by the number of employees, how many hours they worked and how much they earned per hour. Hourly earnings for production workers last month were up just 2.2 percent from a year earlier. Economists follow the wages of this group closely in part because the government has been collecting data on them for much longer than for all private employees, a group that also saw only modest wage gains in October. Wage increases have historically averaged above 3 percent, so the depressed current levels are widely seen as pointing to ongoing slack in the labor market. But after a cavernous decline in employment during the recession, the economy has created around 200,000 jobs a month for almost three years, and the pace of job growth has turned higher this year. The number of workers hired in the 12 months through October was the second highest for a one-year period since 2006. This has pushed the number of hours worked in the economy higher, putting more money into consumers' hands. Ted Wieseman, an economist at Morgan Stanley, said the increase in total wages last month was especially heartening considering the recent plunge in gasoline prices which has freed up money for spending on other things. "For real aggregate income," he said, "what's already been strong growth this year (is) ... accelerating into the key holiday shopping period." (Reporting by Jason Lange; Editing by Bernard Orr)