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September’s wage gains provided more fuel to the argument that the current pace of inflation could run longer than many economists anticipate.

Average hourly earnings rose 0.6% for the month, making the year-over-year increase 4.6%. Over the past six months, wages are running at an average 6% annual gain.

Excluding a brief spike in 2020, that’s the fastest annual pace since the Bureau of Labor Statistics started tracking the measure in March 2007. It’s also the third month in a row that the annual rise has been more than 4% and comes amid a tightening labor market and inflation that has been more persistent than many experts have expected.

“You’re getting the perfect recipe for a secular shift in inflation,” said Joseph LaVorgna, chief economist for the Americas at Natixis and a former chief White House economist. “You’re having a hard time getting the goods you want and restocking your inventory because of the supply chain disruptions. It’s the perfect storm for be-careful-what-you-wish-for if you want higher inflation.”

Though inflation is running around a 30-year high, many economists and Federal Reserve officials believe it is “transitory,” the product of temporary pressures that will ease soon and return the rate back to its usual level around 2%.

However, the pressures being felt in the marketplace don’t feel transitory.

Calego President David Rapps, whose company makes luggage as well as multiple other consumer products for major retailers, scoffed at the notion that inflation will fade soon.

“I laugh when I read very smart people in suits, especially the Fed, say that it’s temporary,” Rapps said. “I don’t know the last time you had all these pressures happening at once in the market around consumer products.”

He said it’s forced his company to make adjustments along supply chain lines and scale to ensure it can keep up.

“We have to get as nimble as we possibly can,” Rapps said. “We have to figure out just on the container front how to get containers in the first place, and in the second place how to get them at the most competitive prices.”

The persistent price increases have multiple ramifications.

At the most basic level, they raise questions on how long cash-flush consumers will keep up a rapid spending pace that saw retail sales rise 0.7% in August although economists thought consumer purchases would decline.

But it’s also important at the policy level.

The Fed is considering pulling back on some of the extraordinary economic help it has provided during the pandemic, and September’s weak 194,000 nonfarm payroll increase might otherwise serve as a deterrent.

“The report was certainly good enough to initiate tapering,” LaVorgna said, using the market’s term for a reduction in the Fed’s monthly bond purchases. “There’s no reason for the Fed to wait.”

Other economists share the sentiment that the central bank can go ahead and start gently easing back on its purchases, which are now set at a minimum of $120 billion a month. Fed officials have indicated they could start tapering in December and conclude the asset purchase program by mid-2022.

While the payroll growth has slowed over the past two months, the inflationary pressures through wages and prices are enough to convince many economists that the economy no longer needs as much help.

“Overall, the most important takeaway in terms of the economic outlook is the increasing inflationary pressure evident in the [September jobs] report,” Citigroup economist Andrew Hollenhorst wrote. “Firms are paying higher wages and extending hours of work as they react to the shortage of labor.”

Wages are clearly on the rise, particularly in some of the pandemic’s hardest-hit sectors.

Leisure and hospitality saw a roughly 0.5% monthly increase in wages, putting the industry up about 10.8% from a year ago. Retail wages rose 0.7% in September and are up 6.2% from the same period in 2020.

“Upward pressure on wages is almost certain to persist for some time – a detriment to employers and another source of inflation pressure, but also a factor that should support consumer spending in the coming months,” Plante Moran Financial Advisors Jim Baird wrote.

That in turn should keep the Fed on its tapering schedule — an announcement in November, with reductions likely starting in December.

The U.S. economy created jobs at a much slower-than-expected pace in September, a pessimistic sign about the state of the economy though the total was held back substantially by a sharp drop in government employment.

Nonfarm payrolls rose by just 194,000 in the month, compared with the Dow Jones estimate of 500,000, the Labor Department reported Friday. The unemployment rate fell to 4.8%, better than the expectation for 5.1% and the lowest since February 2020.

The headline number was hurt by a 123,000 decline in government payrolls, while private payrolls increased by 317,000.

The drop in the jobless rate came as the labor force participation rate edged lower, meaning more people who were sidelined during the coronavirus pandemic have returned to the workforce. A more encompassing number that also includes so-called discouraged workers and those holding part-time jobs for economic reasons declined to 8.5%, also a pandemic-era low.

“This is quite a deflating report,” said Nick Bunker, economic research director at job placement site Indeed. “This year has been one of false dawns for the labor market. Demand for workers is strong and millions of people want to return to work, but employment growth has yet to find its footing.”

Nevertheless, markets reacted little to the news, with Dow futures around flat for the morning and government bond yields mixed as investors digested what was a mixed bag of a report.

Despite the weak jobs total, wages increased sharply. The monthly gain of 0.6% pushed the year-over-year rise to 4.6% as companies use wage increases to combat the persistent labor shortage. The available workforce declined by 183,000 in September and is 3.1 million shy of where it was in February 2020, just before the pandemic was declared.

“Labor shortages are continuing to put severe upward pressure on wages … at a time when the return of low-wage leisure and hospitality workers should be depressing the average,” wrote Andrew Hunter, senior U.S. economist at Capital Economics.

Leisure and hospitality again led job creation, adding 74,000 positions, as the unemployment rate for the sector plunged to 7.7% from 9.1%. Professional and business services contributed 60,000 while retail increased by 56,000.

Job gains were spread across a variety of other sectors: Transportation and warehousing (47,000), information (32,000), social assistance (30,000), manufacturing (26,000), construction (22,000) and wholesale trade (17,000).

Local government education jobs fell by 144,000, which may have been due to seasonal adjustments in the numbers, according to Gus Faucher, chief economist at PNC.

The survey week of Sept. 12 came just as Covid cases were peaking in the U.S. The delta variant spread since has cooled, with cases most recently dropping below an average of 100,000 a day.

Unemployment for Blacks fell to 7.9% from 8.8%, due largely to a drop to 66% from 66.7% in the labor force participation rate for males.

There was some good news in Friday’s report from previous months.

July’s already-strong gains were revised higher by 38,000 to 1.0913 million, while August’s big letdown also was revised up, to 366,000 from the initially reported 235,000.

The employment-to-population level increased to 58.7%, its highest since March 2020.

The report comes at a critical time for the economy, with recent data showing solid consumer spending despite rising prices, growth in the manufacturing and services sector, and surging housing costs.

Federal Reserve officials are watching the jobs numbers closely. The central bank recently has indicated it’s ready to start pulling back on some of the extraordinary help it has provided during the pandemic crisis, primarily because inflation has met and exceeded the Fed’s 2% goal.

However, officials have said they see the jobs market still well short of full employment, a prerequisite for interest rate hikes. Market pricing currently indicates the first rate increase likely will come in November 2022.

“After looking like almost a done deal, today’s jobs number has thrown expectations for tapering into disarray. The Fed doesn’t seem to need much to convince it that tapering should begin imminently, but at just 194,000, jobs numbers are suggesting that the labor market is further from hitting the substantial progress goal than they expected,” said Seema Shah, chief strategist at Principal Global Investors.