U.S. job growth speeds up, unemployment rate falls
Nonfarm payrolls increased by 261,000 jobs last month as 106,000 leisure and hospitality workers returned to work, the Labor Department said in its closely watched employment report on Friday. That was the largest gain since July 2016 but below economists` expectations for an increase of 310,000 jobs.
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US job creation surges in JanuaryU.S. job growth accelerated in October after hurricane-related disruptions in the prior month, but a sharp retreat in annual wage gains and surge in the number of people dropping out of the work force cast a cloud over the labor market.
Nonfarm payrolls increased by 261,000 jobs last month as 106,000 leisure and hospitality workers returned to work, the Labor Department said in its closely watched employment report on Friday. That was the largest gain since July 2016 but below economists` expectations for an increase of 310,000 jobs.
Data for September was revised to show a gain of 18,000 jobs instead of a decline of 33,000 as previously reported. Some aspects of the report, however, were downbeat.
Average hourly earnings slipped by one cent, leaving them unchanged in percentage terms, in part because of the return of the lower-paid industry workers. That lowered the year-on-year increase to 2.4 percent, which was the smallest since February 2016. Wages shot up 0.5 percent in September, lifting the annual increase in that month to 2.9 percent.
Still, October`s job growth acceleration reinforced the Federal Reserve`s assessment on Wednesday that "the labor market has continued to strengthen," and probably does little to change expectations it will raise interest rates in December. The U.S. central bank has lifted rates twice this year.
"The weakness in wages will not go unnoticed at the Fed, particularly for members that remained more concerned over the inflation outlook," said Michael Hanson, chief U.S. economist at TD Securities in New York. "Overall, sustained job growth and labor market slack at pre-crisis lows keeps December in play."
Although the unemployment rate fell to near a 17-year low of 4.1 percent, it was because the labor force dropped by 765,000 after a surprise jump of 575,000 in September.
The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell four-tenths of a percentage point to 62.7 percent.
Prices of U.S. Treasuries rose after the data. The dollar gained against a basket of currencies and stocks on Wall Street were largely flat.LABOR MARKET TIGHTENING
The sharp moderation in job growth in September was blamed on hurricanes Harvey and Irma, which devastated parts of Texas and Florida in late August and early September and left workers, mostly in lower-paying industries such as leisure and hospitality, temporarily unemployed.
Economists, however, remain optimistic that wage growth will accelerate with the labor market near full employment. Last month`s one-tenth percentage point drop in the unemployment rate took it to its lowest reading since December 2000. The jobless rate is now below the Fed`s median forecast for 2017.
A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, dropped to 7.9 percent last month, the lowest level since December 2006, from 8.3 percent in September.
Tepid wage growth supports the view that inflation will continue to undershoot the Fed`s 2 percent target and could raise concerns about consumer spending, which appears to have been largely supported by savings this year.
The economy grew at a 3.0 percent annualized rate in the third quarter. Growth has remained strong even as President Donald Trump and the Republican-led Congress have struggled to enact their economic program.
Republicans in the U.S. House of Representatives on Thursday unveiled a bill that proposed slashing the corporate tax rate to 20 percent from 35 percent, cutting tax rates on individuals and families and ending certain tax breaks. The plan has been met with opposition from small businesses, realtors and homebuilders.
A separate report from the Commerce Department on Friday showed the U.S. trade deficit increased 1.7 percent to $43.5 billion in September as rising exports were offset by a surge in imports. Exports, which were the highest since December 2014, are being buoyed by a weakening dollar and strong global growth.
Monthly job growth has averaged 162,000 over the past three months. The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population.
The slowing job growth trend largely reflects employers` difficulties in finding qualified workers. Some economists believe the impact of the hurricanes was still holding back employment growth.
Private payrolls surged by 219,000 jobs in October after falling by 3,000 in September. Manufacturing employment increased by 24,000 jobs. The retail sector lost 8,300 jobs last month.
Construction payrolls gained 11,000 in October, likely boosted by hiring related to the clean-up and rebuilding efforts in the wake of the hurricanes. There were increases in professional and business services payrolls. Healthcare employment also rose last month.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
