U.S. work­ers gain jobs and raises

Daily Local News (West Chester, PA) - - BUSINESS - By Christo­pher S. Ru­gaber AP Eco­nomics Writer

WASH­ING­TON >> Work­ers en­joyed their best pay raises in seven years last month as em­ploy­ers added 161,000 jobs, the govern­ment said in the last ma­jor snapshot of a slow but durable econ­omy be­fore Amer­i­cans choose a new pres­i­dent next week.

Fri­day’s re­port sketched a pic­ture of a re­silient job mar­ket that likely keeps the Fed­eral Re­serve on track to raise in­ter­est rates when it meets next month. Yet the econ­omy re­mains pock­eted by weak­nesses that have left many feel­ing left be­hind on the eve of Elec­tion Day. Job gains have been steady, but pay raises have only re­cently be­come wide­spread. And mil­lions of Amer­i­cans are work­ing part time but would pre­fer full-time work.

In Oc­to­ber, the un­em­ploy­ment rate dipped to 4.9 per­cent from 5 per­cent, and the govern­ment said em­ploy­ers added more jobs in Au­gust and Septem­ber than it had pre­vi­ously es­ti­mated.

An al­ter­na­tive gauge of job­less­ness that counts not only the of­fi­cially un­em­ployed but also the part-timers who’d pre­fer full-time work and peo­ple who have stopped look­ing for jobs, fell to 9.5 per­cent. That’s the low­est point since 2008. Still, it is higher than is typ­i­cal in a healthy econ­omy.

Av­er­age hourly pay took a big step up in Oc­to­ber, ris­ing 10 cents an hour to an av­er­age of $25.92. That is 2.8 per­cent

higher than a year ago and is the sharpest 12-month rise in seven years.

“If you wanted to show that the econ­omy is still get­ting bet­ter for the typ­i­cal voter, this re­port gives you what you needed,” said Jed Kolko, chief econ­o­mist with In­deed, the job site.

The pickup in pay fol­lows a sub­stan­tial in­crease last year in earn­ings for the typ­i­cal household. The econ­omy ap­pears to be fi­nally de­liv­er­ing wide­spread raises af­ter years of slug­gish pay gains. With the un­em­ploy­ment rate hov­er­ing around healthy lev­els, busi­nesses are likely hav­ing to try harder to at­tract work­ers.

When busi­nesses are forced to of­fer higher pay, they may raise prices to cover the costs, po­ten­tially boost­ing in­fla­tion. That dy­namic has helped make a Fed rate hike likely in mid-De­cem­ber.

“The only re­main­ing ob­sta­cle to the Fed hik­ing in De­cem­ber would be a sig­nif­i­cant ad­verse fi­nan­cial mar­ket re­ac­tion to the US pres­i­den­tial elec­tion,” Chris Wil­liamson, an econ­o­mist at IHS Markit, wrote in a re­search note.

Fri­day’s re­port said em­ploy­ers added 44,000 more jobs in Au­gust and Septem­ber com­bined than it had ear­lier es­ti­mated. That put re­cent hir­ing in line with this year’s solid if lessthan-ro­bust pace. In Septem­ber, it had ap­peared that hir­ing was slow­ing.

Fewer teenagers worked or were look­ing for work last month. That trend re­duce the pro­por­tion of Amer­i­cans in the work­force, which is de­fined as peo­ple who ei­ther have a job or are ac­tively seek­ing one.

But Amer­i­cans in their prime work­ing years — ages 25 through 54 — ex­tended a re­cent trend of re­turn­ing to work, per­haps drawn by ris­ing pay. More than 78 per­cent of peo­ple in that age bracket now have jobs, the high­est pro­por­tion since November 2008, in the midst of the Great Re­ces­sion. Still, that’s down from 80 per­cent be­fore the down­turn.

De­spite last month’s progress, the econ­omy is grow­ing at the slow­est pace of any in a re­cov­ery since World War II. Growth picked up to a 2.9 per­cent an­nual rate in the July-Septem­ber quar­ter, the govern­ment has es­ti­mated, much faster than the 1.1 per­cent pace for the first half of the year.

But most an­a­lysts fore­see only mod­est ex­pan­sion in the Oc­to­ber-De­cem­ber quar­ter, leav­ing growth at an ane­mic rate of about 1.8 per­cent for all of 2016.

Hir­ing in Oc­to­ber was led by pro­fes­sional and busi­ness ser­vices, a cat­e­gory that in­cludes mostly higher-pay­ing jobs in en­gi­neer­ing, ac­count­ing and in­for­ma­tion tech­nol­ogy. Those com­pa­nies added 43,000 jobs, fol­lowed by health care providers, which gained 39,100.

Yet many com­pa­nies are shed­ding work­ers. Man­u­fac­tur­ers cut jobs last month, as did re­tail­ers de­spite Oc­to­ber be­ing the month where stores usu­ally ramp up for hol­i­day shop­ping. Both are fac­tors that could weigh on eco­nomic growth this year.

“It’s not a uni­formly pos­i­tive re­port,” said Ja­son Schenker, pres­i­dent of Pres­tige Eco­nomics. “There is some patch­i­ness to it.”

Con­sumers — the U.S. econ­omy’s pri­mary fuel — are show­ing some stay­ing power, even though their spend­ing slowed in the July-Septem­ber pe­riod. Con­sumer spend­ing did rise at a ro­bust pace in Septem­ber alone.

Much of that spend­ing was on higher-priced items, in­clud­ing cars and homes. Auto sales are run­ning close to last year’s record high of more than 17 mil­lion. And while home sales have lev­eled off this year, they have done so at a nearly healthy level of 5.5 mil­lion.

Busi­nesses, though, have been cut­ting their spend­ing on ma­chin­ery, com­put­ers and other equip­ment. They have re­duced such spend­ing for the past four quar­ters — the long­est such stretch since the re­ces­sion of­fi­cially ended in mid-2009.

BOB AN­DRES/AT­LANTA JOUR­NAL-CON­STI­TU­TION VIA AP

Kanockwa Hor­ton, left, from Stone Moun­tain, Ga., and Jac­que­line Mer­ritt, from At­lanta, stand first in line at the Air­port Com­mu­nity Job Fair in At­lanta, joined by hun­dreds of other ap­pli­cants in line be­fore the 10 a.m. open­ing. The La­bor Depart­ment is­sued its jobs re­port for Oc­to­ber on Fri­day.

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