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U.S. job growth accelerates, jobless rate falls to 4.1 per cent

U.S. job growth accelerates, jobless rate falls to 4.1 per cent

U.S. job growth accelerated in October after hurricane-related disruptions hurt employment in September, but there were signs that labour market momentum was slowing as annual wage gains sharply retreated.

Non-farm 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 was below economists' expectations for an increase of 310,000 jobs.

 

Data for September was revised to show payrolls rising by 18,000 instead of falling by 33,000 as previously reported. The unemployment rate fell to near a 17-year low of 4.1 per cent because people left the labor force. Still, the data probably does little to change expectations the Federal Reserve will raise interest rates in December.

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, leaving workers, mostly in lower-paying industries such as leisure and hospitality, temporarily unemployed.

October's acceleration in employment growth reinforces the Fed's assessment on Wednesday that "the labour market has continued to strengthen and that economic activity has been rising at a solid rate despite hurricane-related disruptions."

The U.S. central bank kept interest rates unchanged on Wednesday and financial markets have almost priced in an increase in borrowing costs in December. The Fed has hiked rates twice this year.

But the return of the lower-paying industry workers held down wage growth in October. Average hourly earnings slipped by one cent, leaving them unchanged in percentage terms. That lowered the year-on-year increase to 2.4 per cent, which was the smallest annual increase since February 2016. They shot up 0.5 per cent in September, lifting the annual increase in that month to 2.9 per cent.

Economists, however, remain optimistic that wage growth will accelerate with the labour 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 decline, however, reflected a drop in the labour force. The jobless rate is now below the Fed's median forecast for 2017.

7 months ago

By HR Reporters


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