USA job growth rebounds; strong annual wage gain expected

USA job growth rebounds; strong annual wage gain expected

Troy Powers
November 5, 2018

United States job growth likely rebounded in October, with wages expected to have recorded their largest annual gain in 9-1/2 years, pointing to further labor market tightening that could encourage the Federal Reserve to raise interest rates again in December. The unemployment rate remained static at 3.7%, a 49-year low.

Sustained labour market strength could ease fears about the economy's health following weak housing data and stalling business spending.

Meanwhile, Presidential Advisor Ivanka Trump continues her work to bridge the gap between a historic number of job openings and necessary skill sets for workers.

The change in total nonfarm payroll employment for September was revised down from 134,000 to 118,000.

But with unemployment flirting with historic lows and the economy juiced by tax cuts, stimulus and steady job creation, economists say policymakers will feel they have little choice but to continue raising rates to stave off inflation and prevent the economy from overheating.

Acosta also said noted that Hurricane Michael's path through the Florida Panhandle on October 10 had no discernible effect on employment data or responses to the monthly labor survey. Average hourly earnings rose 3.1 percent in October from a year earlier, the sharpest year-over-year gain since 2009.

Average work week increased to 34.5 hours, from 34.4 hours in prior month; a shorter workweek has the effect of boosting average hourly pay.

All of which shows the labor market getting tighter, good news for workers getting higher hourly wages and, perhaps even more important, bigger weekly paychecks as hours worked also rose.

Employers shook off a September slowdown to add a robust 250,000 jobs to their payrolls in October, the Labor Department said Friday.

The dollar .DXY was trading higher against a basket of currencies.

U.S. stock futures declined after the report, while the dollar trimmed losses and 10-year Treasury yields were higher.

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Employers also increased hours for workers last month.

Firming wages support the view that inflation will hover around the Fed's 2.0 percent target for a while. An estimated 711,000 people joined the labor force last month.

But the anticipated bounce back in job growth is likely to be tempered some what by Hurricane Michael, which struck the Florida Panhandle in mid-October. The Fed raised borrowing costs in September for the third time this year. "Just out: 3.7% Unemployment is the lowest number since 1969!" This is the highest labor force participation rate for prime age women since July 2009. "Market participants will likely need to adjust their expectations going forward".

Wages jumped. Average monthly earnings increased 3.1 percent from the year before, the first time in the current economic expansion that the figure has crossed the 3 percent mark.

Wages are also rising.

For all the positive news, these trends have caused many economists to forecast slower growth in the final months of this year and into 2019. Hispanic unemployment hit a new low of 4.4 percent. All levels of government added 4,000 jobs from public payrolls last month.

Construction employment rose by 30,000 in October, with almost half of the gain occurring among residential specialty trade contractors.

Among other key sectors, transportation and warehousing added 25,000 jobs in October.

In the blue-collar focused manufacturing and construction sectors, some 32,000 and 30,000 jobs were added, respective.

So far, manufacturing hiring does not appear to have been affected by the Trump administration's protectionist trade policy, which has contributed to capacity constraints at factories.