US Jobless Rate Nears 49-Year Lows, Hurricane Hurts Wages, Payrolls
US job growth slowed in September, as Hurricane Florence depressed restaurant and retail payrolls, but the unemployment rate fell to near a 49-year low of 3.7 percent, pointing to a further tightening in labor market conditions.
The Labor Department’s closely watched monthly employment report Friday also showed a steady rise in wages, suggesting moderate inflation pressures, which could ease concerns about the economy overheating and keep the Federal Reserve on a path of gradual interest rate increases.
NFPs increased by 134,000 jobs last month, the fewest in a year, as the retail and leisure and hospitality sectors shed employment. Data for July and August were revised to show 87,000 more jobs added than previously reported
The economy needs to create roughly 120,000 jobs per month to keep up with growth in the working-age population.
Economists polled by Reuters had forecast payrolls increasing by 185,000 jobs in September and the unemployment rate falling 1/10th percentage point to 3.8%.
The Labor Department said it was possible that Hurricane Florence, which lashed South and North Carolina in mid-September, could have affected employment in some industries. It said it could not quantify the net effect on employment.
Payrolls are calculated from a survey of employers, which treats any worker who was not paid for any part of the pay period that includes the 12th of the month as unemployed. The average workweek was unchanged at 34.5 hrs in September.
The smaller survey of households from which the jobless rate is derived regards persons as employed regardless of whether they missed work during the reference week and were unpaid as result. It showed 299,000 people reported staying at home in September because of bad weather. About 1.5-M employees worked part-time because of the weather last month.
Average hourly earnings increased 0.3% in September after a similar rise in August.
With September’s increase below the 0.5% gainer notched during the same frame last year, the annual rise in wages fell to 2.8 from 2.9% in August, which was the biggest advance in more than 9 years.
Wage growth remains sufficient to keep inflation around the Fed’s 2% target. As more slack is squeezed out of the labor market, economists expect annual wage growth to hit 3%.
Last month, employment in the leisure and hospitality sector fell by 17,000 jobs, the 1st fall since September 2017. Retail payrolls dropped by 20,000 jobs in September.
Manufacturing payrolls increased by 18,000 in September after rising by 5,000 in August.
Construction companies hired 23,000 more workers last month after increasing payrolls by 26,000 jobs in August. Professional and business services employment increased by 54,000 jobs last month and government payrolls rose 13,000.
While surveys have shown manufacturers growing more concerned about an escalating trade war between the United States and China, it does not appear to have affected hiring.
In fact, the Fed’s latest survey of national business conditions reflected concerns about labor shortages that are extending into non-skilled occupations as much as about tariffs.
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