WASHINGTON (Reuters) – U. S. job growth slowed sharply in September likely as Hurricane Florence depressed restaurant and retail payrolls, but the unemployment rate fell…
WASHINGTON (Reuters) – U. S. job growth slowed sharply in September likely as Hurricane Florence depressed restaurant and retail payrolls, but the unemployment rate fell to near a 49-year low of 3.7 percent, pointing to a further tightening in labor market conditions.
The Labor Department’s closely watched monthly employment report on Friday also showed a steady rise in wages, suggesting moderate inflation pressures, which could ease concerns about the economy overheating and keep the Federal Reserve on a path of gradual interest rate increases.
Nonfarm payrolls increased by 134,000 jobs last month, the fewest in a year, as the retail and leisure and hospitality sectors shed employment. Data for July and August were revised to show 87,000 more jobs added than previously reported.
The economy needs to create roughly 120,000 jobs per month to keep up with growth in the working-age population.
Economists polled by Reuters had forecast payrolls increasing by 185,000 jobs in September and the unemployment rate falling one-tenth of a percentage point to 3.8 percent.
Fed Chairman Jerome Powell said on Tuesday that the economy’s outlook was “remarkably positive” and he believed it was on the cusp of a “historically rare” era of ultra-low unemployment and tame inflation.
The U. S. central bank raised rates last week for the third time this year and removed the reference in its post-meeting statement to monetary policy remaining “accommodative.”
A robust labor market is underpinning the economy and together with high savings could support consumer spending as the stimulus from the Trump administration’s $1.5 trillion tax cut package fades.
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. It said it was impossible to quantify the net effect on employment.
Payrolls are calculated from a survey of employers, which treats any worker who was not paid for any part of the pay period that includes the 12th of the month as unemployed.
Many of the dislocated people will probably return to work.
The household survey showed 299,000 people reported staying at home in September because of the weather. It showed 1.489 million employees worked part-time because of the weather.
The drop of two-tenths of a percentage point in the unemployment rate from 3.9 percent in August pushed it to levels last seen in December 1969 and left it near the Fed’s forecast of 3.7 percent by the end of this year.
Average hourly earnings increased eight cents, or 0.3 percent, in September after rising 0.3 percent in the prior month. With September’s increase below the 0.5 percent gain notched during the same period last year, that lowered the annual increase in wages to 2.8 percent from 2.9 percent in August, which was the biggest rise 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 labor market, economists expect annual wage growth to hit 3 percent. The average workweek was unchanged at 34.5 hours.
While surveys have shown manufacturers growing more concerned about an escalating trade war between the United States and China, that does not appear to have affected hiring.
In fact, the Fed’s latest survey of national business conditions reflected concerns about labor shortages that are extending into non-skilled occupations as much as about tariffs.
Washington last month slapped tariffs on $200 billion worth of Chinese goods, with Beijing retaliating with duties on $60 billion worth of U. S. products. The United States and China had already imposed tariffs on $50 billion worth of each other’s goods.
The trilateral trade agreement between the United States, Canada and Mexico was salvaged in an 11th-hour deal on Sunday.
Manufacturing payrolls increased by 18,000 in September.
Construction companies hired 23,000 more workers last month after increasing payrolls by 26,000 jobs in August. Employment in the leisure and hospitality sector fell by 17,000 jobs, the first drop since September 2017. Retail payrolls dropped by 20,000 jobs last month.
(Reporting by Lucia Mutikani)
