United States payrolls and wages cool while jobless rate hits 48-year low

Eileen GuzmanOct 07, 2018

The construction, transportation and health-care industries recorded some of the strongest hiring numbers in September, as the USA unemployment rate fell to its lowest level in 49 years.

The employment rate in the leisure and hospitality fields showed little change in September, a contrast from the modest upward trend that had been in place before last month, the Labor Department said. The Labor Department said claims for South and North Carolina were affected by Hurricane Florence, which lashed the region in mid-September.

With September's increase below the 0.5% gain recorded during the same time last year, that lowered the annual increase in wages to 2.8% from 2.9% in August, which was the biggest rise in more than nine years. Over time, higher borrowing costs make auto loans, mortgages and corporate debt more expensive and can eventually slow the economy.

The dollar and Treasury yields fluctuated after the report, with the 10-year rate briefly touching a fresh seven-year high.

The ultra-low jobless rate - the best in almost 49 years - reflects a healthy economy driven by strong consumer and business spending.

Trade contributed 1.2 percentage points to the economy's 4.2 percent annualized growth pace in the second quarter, mostly reflecting a front-loading of soybean exports to China before Beijing's retaliatory tariffs came into effect in early July.

Along with the headline employment data, markets are closely watching wage numbers, which increased last month in line with expectations. The U.S. central bank raised interest rates last week for the third time this year and removed the reference in its post-meeting statement to monetary policy remaining "accommodative".

For now, consumers, business executives and most economists remain optimistic. Retailers have begun scrambling to hire enough workers for what's expected to be a robust holiday shopping season. The unemployment rate is forecast falling one-tenth of a percentage point to 3.8 percent, an 18-year low first hit in May. Over the last three months, job gains have averaged 190,000 per month.

Americans have continued spending steadily and appear to be in generally stable financial shape.

Barrera said she has also seen data that show more people are going straight from not being in the labor force to being employed, bypassing the "unemployed" status altogether.

Details across industries showed construction payrolls rose by 23 000 and manufacturing added 18 000 jobs. Sales of existing homes have fallen over the past year, held back in part by higher mortgage rates.

President Donald Trump's trade fights could also weigh on the economy, though the effect on hiring won't likely be felt until next year, economists say. Auto sales have also slumped. The Trump administration has imposed tariffs on imported steel and aluminum as well as on roughly half of China's imports to the United Sates. This suggests that the tax cuts that took effect this year are boosting job opportunities.

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