US job growth
The latest figures show that the unemployment rate in United States fell to its lowest level in nearly 17 years in October while job creation resumed climbing after the two late-summer hurricanes. The US jobless rate fell to 4.1 per cent, down a tenth of a point from September, the lowest the US economy has seen since December 2000.
Employers added 261,000 net new positions as businesses reopened in the wake of Hurricanes Harvey and Irma, although economists had forecast a rebound of 300,000 new jobs. But the data for September turned out not to be as bad as initially reported, with 18,000 new jobs created, rather than a loss of 33,000 positions. Together with the upward revision for August, an additional 90,000 jobs were added for those two months.
Media reports show that employment in bars and restaurants sharply rebounded from the hurricanes, adding 89,000 positions in October following September's 98,000-job decline. Manufacturers added 24,000 new positions but the retail workforce fell by more than 8,000 and mining and logging also shrank slightly, losing 2,000 positions. The results generally showed US labour markets in good health, easily bouncing back from the storms that idled the US energy hub in southeast Texas and forced millions of Floridians to flee their homes. With nearly 1.5 million new jobs since the president took office, including over 260,000 last month, it seems the government has succeeded in putting Americans back to work. Nevertheless, average monthly job creation now stands at 169,000 so far this year, significantly below the 192,000 monthly average recorded through October of last year. The labour force participation rate also fell 0.4 points to 62.7pc and the employment-to-population ratio shrank 0.2 points to 60.2pc - suggesting the fall in unemployment may partly reflect a dip in the size of the work force as well as job creation.
According to analysts, the rebound was smaller than expected but upward revisions to job creation in the prior months meant the storms had caused less damage than originally feared, making for an upbeat report. Naturally, the White House hailed the outcome, saying the Trump administration's economic agenda was bearing fruit. However, the report also showed a shrinking labour force and confirmed job creation in 2017 has lagged behind last year. The falling unemployment rate was likely to spark further debate among Federal Reserve policymakers, who appear set to raise the benchmark US interest rate next month despite doggedly low inflation even while a vocal minority argues the Fed should remain on hold.
Since January, unemployment has fallen seven tenths of a percentage point, and more employers say positions are increasingly difficult to fill amid a scarcity of qualified labour. As in the late 1990s, the last time unemployment was this low, the Fed will start to sweat the potential inflation implications. The central bank worries low unemployment eventually will fuel higher wages and overall inflation, even though there have been no signs of that yet. Wages pressures in October were flat, with average hourly earnings falling by a penny to $26.53, putting wages up 2.4pc over the past 12 months, just above inflation.
But economists said the hurricanes distorted wage calculations, with average compensation rising in September because fewer hourly labourers were able to work, and then falling as they returned to their jobs. Experts say more clear-cut evidence of wage pressures in the months ahead will be needed to support ongoing Fed tightening, including another rate hike in December.