Core Insights - India Inc has issued the lowest pay hike in nearly 15 years, indicating a cooling job market and uncertain prospects for future appraisals [1][3] - The average salary increment for 2025 was projected at 9.2% but actual hikes were only 8.9%, the lowest since 2020 [3][5] - Real wage growth, after adjusting for inflation, stands at 4.7% despite the nominal salary hike of 8.9% [4] Salary Trends - Aon's report suggests a projected average salary increment of 9% for 2026, with certain sectors like non-banking financial companies and real estate expected to perform better [5] - The consulting sector is shifting towards a "pay for performance" model, with partner-level compensation hikes dropping from around 40% to 20% [6] Employment Dynamics - Involuntary attrition has reached 4.6%, the highest since the pandemic year, indicating a cautious job market where employees prefer job security [7] - The job market has shifted from a candidate-driven environment in 2022-2023 to a more cautious stance, with employees hesitant to switch jobs [8] Compensation Structure - The risk factor in compensation has increased, with a significant portion of pay now tied to performance and stock options [9] - Median salary hikes for CXOs in sectors like pharmaceuticals and tech can still reach 20-25% during job changes, indicating some resilience at the top levels [10]

Economic Activity & Labor Market - Most of the 12 Federal Reserve districts reported little or no change in economic activity overall [1] - 11 of the 12 Federal Reserve districts describe little or no net change in overall employment levels [2] - Real wage growth seems dismal, weighing on consumer spending and activity [1][4][5] Inflation & Prices - Price growth is characterized as moderate or modest in ten of the 12 districts [3] - Strong input price growth is outpacing moderate selling prices, impacting the inflation landscape [3] - Tariffs are creating price pressures, but weakening real wages are causing demand to retract [4][5] Monetary Policy & Fed Decision - The market widely expects a 25 basis point cut at the upcoming Fed meeting [6] - Economic uncertainty and tariffs are frequently cited as negative factors [5][13] - Weak local conditions in Kansas City, presided over by a hawkish member, could influence voting for a rate cut [7][8][9][10] - A new Fed board member could advocate for a rate cut, potentially influencing discussions [16] - There is enough evidence to warrant a cut, but the timing (September vs later) is uncertain [14][15]