US job creation remains solid
A FINAL glimpse of the US economy before this week’s bitterly fought presidential election delivered a picture of relative health, with job creation up and unemployment falling.
The jobs report for October showed the United States adding a solid 161,000 new positions while the jobless rate fell to 4.9 percent, according to Labor Department figures. The results appeared unlikely to lift the fortunes of either Democrat candidate Hillary Clinton or Republican Donald Trump. Appearing in New Hampshire, Mr Trump disputed the accuracy of the results and called them “an absolute disaster”.
“People are stopping. They’re not looking for work any more because they can’t get a job,” he said.
At a rally in Pittsburgh, Pennsylvania, Ms Clinton took a diametrically opposed view.
“We got some good news this morning. Our economy created 161,000 jobs last month. That is 73 straight months of job growth,” she told supporters.
Analysts agreed with Ms Clinton’s view and said the jobs report showed steady momentum in the world’s largest economy, with the Labor Department revising upward its job creation numbers for August and September by a total of 44,000 positions, taking the average for the past three months to a strong 176,000 new jobs. Wages also saw their strongest gain in seven years, as average hourly earnings rose 2.8pc year-on-year to US$25.92.
The unemployment rate was little-changed from prior months, returning to the level recorded between June and August. However, the jobless rate among Hispanics fell sharply to 5.7pc from 6.4pc.
Despite steady job creation, the recovery has not eased the persistent anxieties of many in the electorate.
Labour force participation was little changed in October at 62.8pc and the number of long-term unemployed was steady at 2 million people, about one quarter of total unemployment.
The White House touted the jobs data, citing what it called “the longest streak of job growth on record”, but offered the customary acknowledgement that the battle was not yet won.
“US businesses have now added 15.5 million jobs since early 2010,” Jason Furman, chair of the Council of Economic Advisors, said.
Business services and healthcare saw strong gains last month, adding 43,000 and 31,000 positions respectively, with healthcare having grown by more than 400,000 positions over the previous 12 months.
Policymakers at the US Federal Reserve have so far held off raising US interest rates during 2016, hoping to avoid interrupting a fragile recovery, a position they reaffirmed this week. However, they have signalled their intention to increase rates as soon as December.
Federal Reserve vice chair Stanley Fischer said he believes the economy is nearly at full employment and will continue to grow at a moderate pace.
The employment and growth outlooks are key factors in whether the US central bank increases the benchmark interest rate next month, after policymakers decided to stand pat in their meeting this week.
However, in his remarks to an International Monetary Fund economics conference, Mr Fischer gave no real hints about whether the Fed would move at its December 13-14 meeting, a year after the first and only post-crisis rate increase.
“The markets put a probability of above 70pc on the rate being increased in December,” he said.
Inflation has been stubbornly low, which has been a main factor in the Fed’s reticence to raise rates. However, the policy statement issued last week indicated again that officials expect inflation to move higher, as the impact of lower oil prices and a strong dollar dissipates.
Mr Fischer noted that the Fed’s preferred inflation measure, the personal consumption expenditures (PCE) index, has reached 1.2pc yearover-year.
“It can be expected to rise further towards our 2pc target, supported by higher core PCE inflation, which ran at a 1.7pc pace in September,” he said.
Chris Williamson, chief business economist at IHS Markit, said the new jobs data made a December rate increase more likely, and initial estimates for US growth in the third quarter show the economy had expanded by 2.9pc, a sign of regained momentum. –