US Payrolls and Wages Cool While Jobless Rate Hits 48-Year Low

Vulnerable Employment

In August, average hourly wages rose 2.9 percent from 12 months earlier - the biggest year-over-year increase since the recession officially ended in June 2009.

The Fed raised rates last week for the third time this year and removed the reference in its post-meeting statement to monetary policy remaining "accommodative".

Beyond the payroll numbers and the jobless rate, the real news was that wages continued their steady but moderate rise. If more people start looking - and don't immediately find a job - the government will count them as unemployed. Over the last three months, job gains have averaged 190,000 per month.

The historically low unemployment rate and relatively weak job growth number might indicate that employers are having an increasingly hard time adding positions because of the availability of workers.

Professional and business services, which includes a variety of industries, had the most new hires last month with job gains of 54,000 on a seasonally adjusted basis, according to data released Friday by the Labor Department.

Nonfarm payrolls increased by 134,000, fewer than expected and slowed in part by job losses attributed to Hurricane Florence. The average workweek was unchanged at 34.5 hours in September. Claims fell to 202,000 during the week ended September 15, which was the lowest level since November 1969.

Barrera said she has also seen data that show more people are going straight from not being in the labor force to being employed, bypassing the "unemployed" status altogether.

The household survey showed 299,000 people reported staying at home in September because of the weather, while 1.489 million employees worked part-time because of the weather. The strength of that gain, if it can be sustained, would suggest that the low unemployment rate is pressuring more companies to raise pay in order to attract and keep workers. Black and Hispanic unemployment rates continue to hover near record lows.

Following this report, stock futures were lower, but little-changed, while Treasury yields were still near their highs of the week with the 10-year Treasury sitting near 3.21% and the 30-year near 3.38%.

Average hourly earnings rose by 0.3% in September, as expected, and the same as the preceding month.

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

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

Some economists say wage growth might be understated amid anecdotal evidence that worker shortages as a result of the tightening labor market were forcing companies to raise compensation. "The standard measures just don't reflect those increases well, if at all". Manufacturers expanded their payrolls by 18,000. President Donald Trump has imposed tariffs on imported steel and aluminum as well as on roughly half of China's imports to the United Sates.

Retail payrolls dropped by 20,000 jobs last month, the figure also revealed. The United States has since struck a trade deal with Canada and Mexico. Many economists expect pay growth to accelerate in coming months.

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