Thursday, 22 November, 2018

US Job Growth Jumps; Annual Wage Gain Largest Since 2009

JOBS BOOM: US Companies Add a Robust 227000 Jobs in October US job growth seen accelerating; strong annual wage gain expected
Nellie Chapman | 04 November, 2018, 23:03

Last month, employment in the leisure and hospitality sector likely rebounded after declining by 17,000 jobs in September, the first drop in year.

Employers shook off a September slowdown to add a robust 250,000 jobs to their payrolls in October, the Labor Department said Friday. The civilian labor force participation rate for workers between ages 25 and 54, which measures the percentage of the population that is working or looking for work, jumped to its highest level since May 2010. Businesses are staffing up at a rapid pace in response to healthy consumer spending and strong economic growth.

Though economists predict that hiring will eventually slow as the pool of unemployed Americans dwindles, there's no sign of that happening yet. The economy expanded 3.5 percent, though most economists forecast growth will fall below 3 percent in the final three months of this year.

A strong labor market and rising wages should provide a boost to the housing market, which has seen sales fall in comparison to past year with the uptick in rates.

Manufacturing jobs had been expected to grow by just 13,000 in October, which typically is a weak month in that category.

The labor-market data would likely keep the Federal Reserve on track to gradually lift its benchmark interest rate. The survey of households (which is separate from the establishment survey that produces the payroll numbers) showed a huge influx of 711,000 folks into the labor force, of which 600,000 found jobs, even more than the 420,000 increase in September. The Fed is expected to raise rates for a fourth time this year in December, and economists expect at least two further increase next year.

According to the Labor Department, healthcare added 36,000 jobs, manufacturing added 32,000 jobs and construction added 30,000 jobs.

Job growth in the United States slowed considerably in September, largely because of Hurricane Florence's devastating run through the Carolinas. And we'd like to see more reports of rising business investment to lay a strong basis for future hiring. Construction expanded by 30,000 roles, almost half of which focus on residential homes.

According to a report last week from the research arm of the payroll processing firm ADP, for instance, American workers are earning almost $1 more per hour on average than they were a year ago. Americans increased their spending by 4 percent in the July-September quarter, the biggest acceleration in almost four years.

Some of the strong payrolls growth came from a slight downward revision to September's number, but overall it lifts the average over the past 12 months to 211,000. Hourly wages rose 5 cents for the period, to $27.30. So far, hiring in the manufacturing sector does not appear to have been affected by the White House's protectionist trade policy, which has contributed to capacity constraints at factories. The personal consumption expenditures price index excluding the volatile food and energy components has increased 2.0 percent for five straight months.

There are also signs that pay hikes are taking hold more firmly: Amazon.com Inc. just raised its minimum hourly wage to $15 for US employees.

Although pay increases can help boost spending and propel the economy's growth, they can also lead companies to raise prices to cover their higher labor costs. But economists said it's still encouraging, as the pay increase remains well above the inflation rate, meaning that workers' pay is actually raising their standard of living.