United States job growth increased in October following hurricane-related interferences affected September’s numbers. Yet, there are signs the momentum of the labor market is reducing as annual wage gains sharply withdrew. The Fed has increased twice this year and markets are anticipating another hike in December, although the U.S. central bank kept interest rates unchanged on Wednesday.
Last month, nonfarm payrolls increased by 261,000 jobs as 106,000 leisure and hospitality workers returned to employment, the Labor Department said in its employment report. Although, this was the largest increase since July 2016 it did not come close to economists’ estimates of 310,000 jobs. Data for September required revision showing payrolls increasing by 18,000 instead of dropping by 33,000 and the unemployment rate dropped to 4.1 percent, a 17-year low.
October’s growth spurt in employment verifies the Fed’s valuation that “the labor market has continued to strengthen, and that economic activity has been rising at a solid rate despite hurricane-related disruptions.”
The return of the lower-paying industry workers brought down wage growth last month. Average hourly earnings dropped by one cent, lowering the year-on-year increase to 2.4 percent, the smallest increase since February 2016.
Economists are hopeful that wage growth can bring the labor market near full employment. October’s drop in the unemployment rate was the lowest since December 2000. The jobless rate is now under the Fed’s median forecast for the year.
In the third quarter, the economy grew at a 3.0 percent annualized rate. Economic strength has continued even as President Trump and Congress struggle to pass their economic program. On Thursday, a bill that offers cutting the corporate tax rate to 20 percent from 35 percent, reducing tax rates for individuals and families and eliminating specific tax breaks was revealed.
October’s employment gains averaged to 90,000 for the last two months, lower than the 162,000 monthly average for the last three months. To sustain the working age population, the economy needs to create 75,000 to 100,000 jobs per month. The slowdown in the job growth trend largely reflects difficulties by employers finding qualified workers.
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In October, private payrolls rose by 219,000 compared to dropping 3,000 in September. Manufacturing employment improved by 24,000 jobs. Construction payrolls gained 11,000, related to clean-up and rebuilding efforts of the hurricanes.