Unemployment rate drops to 3.7 percent - lowest since 1969

Ivan Schwartz
October 7, 2018

The participation rate, or share of working-age people in the labour force, was unchanged at 62.7%.

The Black unemployment rate under Trump has been largely a source of concern, with many African Americans anxious about increases or stagnant immobilization when it comes to joblessness. That should keep the Federal Reserve on its present path of continuing to lift short-term interest rates, including another 0.25 percentage point increase widely anticipated in December.

The number of Americans filing for unemployment benefits fell to a near 49-year low last week, pointing to sustained labour market strength, which should continue to underpin economic growth. The central bank raised rates last week for the third time this year. They added 87,000 jobs to the two months combined, most of those in August, which went from 201,000 jobs added to 270,000.

While economists cheered the unemployment rate, only 134,000 jobs were created in September, which was well below the consensus prediction of 180,000.

United States non-farm payrolls increased by 134,000 jobs last month, the fewest in a year, as the retail and leisure and hospitality sectors shed employment.

"The markets could give this a little bit of a pass cause it's not clear what impact the hurricane had at the moment".

The Labor Department said it was possible that Hurricane Florence, which lashed South and North Carolina in mid-September, could have affected employment in some industries.

"The acceleration in job gains this year is extraordinary in an environment where firms are having great difficulty finding qualified candidates", said Stephen Stanley, chief economist at Amherst Pierpont Securities.

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Pay gains remain modest but are showing signs of accelerating. This not only deflated the monthly payroll change, it also showed up in outsized wage pressures for the construction and utility sectors.

The annual rise in wages fell to 2.8 percent from 2.9 percent in August, which was the biggest advance in more than nine years.

Wage growth remains sufficient to keep inflation around the Fed's 2 percent target.

As more slack is squeezed out of the labour market, economists expect annual wage growth to hit 3%.

Amazon's announcement this week that it would increase its minimum hourly wage to $15 for all its USA employees elevated the pressure on other employers to lift their wages as well.

"Businesses of all sizes are indicating they are doing whatever they can to keep their workers", said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. Overall government payrolls increased by 13 000. The most direct evidence of the hurricane's impact showed up in the elevated number of workers who reported reduced hours due to bad weather - this metric was over six times larger than what is normal for September.

The number of part-time workers who would have preferred to have full-time jobs rose by 263,000 to 4.6 million. September's unemployment rate has decreased or remained the same every year since it hit a high of 9.8 percent in 2009.

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