US job growth cools but unemployment rate falls to 3.7%

Muriel Colon
October 7, 2018

Chairman of the Federal Reserve 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. Sales of existing homes have fallen over the past year. "I would view this as a full-employment jobs report", Alan Krueger, a Princeton University economics professor and former head of the White House Council of Economic Advisers under Barack Obama, said on Bloomberg Television.

"Given the fact that the job market has been so strong for so long, there is an expectation that labour will begin to take more of the capital from corporate profits going forward", said Michael Arone, the chief investment strategist for the US SPDR business at State Street Global Advisors.

Unemployment rates for other individual groups of workers stayed roughly the same from last month: 3.5 percent for Asian-Americans, 4.5 percent for Hispanics, 3.3 percent for women, and 12.8 percent for teenagers.

United States job growth slowed sharply in September as Hurricane Florence depressed restaurant and retail payrolls.

The number of Americans filing for unemployment benefits fell to a near 49-year low last week, pointing to sustained labor market strength, which continues to underpin economic growth.

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

Meanwhile, the labor market faces other challenges.

Andrew Grantham, senior economist at CIBC described September's employment report as "solid", despite the weaker than expected headline number.

In September, professional and business services grew by 54,000, transportation and warehousing jobs by almost 24,000, construction by 23,000, manufacturing by 18,000 and health care by almost 30,000. That compares with 23 000 in August, though the September 2017 count of 1.47 million - following hurricanes Harvey and Irma - was the highest since 1996.

Healthcare employment rose by 26,000 in September. Overall government payrolls increased by 13 000.

Average hourly earnings for private, non-farm employees also rose this month by 8 cents, reaching $27.24. The average work week was unchanged at 34.5 hours, department figures showed. Economists had penciled in some cooling in the year-over-year results, as a strong number for September 2017 wages presented a hard comparison.

"The momentum in the labor market remains strong and we expect the unemployment rate to continue to decline", said John Ryding, chief economist at RDQ Economics in NY.

Wage growth slowed last month, with average hourly earnings up 2.8 percent from a year earlier. And if it has, will a shortage of workers compel businesses to raise pay quickly and sharply? The rate fell 17,000 last month.

If people who aren't working are encouraged by steady hiring and pay increases to begin looking for a job, their influx could prevent unemployment from falling further.

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