US unemployment falls to 4.1%, lowest in 17 years

Factory orders up; trade deficit rises to $43.5bn in Sept

WASHINGTON, Nov 4, (Agencies): US unemployment fell to its lowest level in nearly 17 years in October, according to data released Friday, which President Donald Trump said was proof his policies were bearing fruit.

Job creation resumed climbing after two late-summer hurricanes hit the economy, albeit at a slower rate than expected, according to the Labor Department’s key monthly employment report.

But upward revisions to job creation in August and September meant the storms caused less damage than originally feared, making for an upbeat report.

Still, the data also showed a shrinking labor force and confirmed job creation in 2017 has lagged behind the last year of the Obama adminstration.

The US jobless rate fell to 4.1 percent, 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 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.

The results generally showed US labor 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’s clear his agenda is putting Americans back to work,” White House Press Secretary Sarah Sanders said.

Trump tweeted out a celebratory message on the report: “JOBS, JOBS, JOBS!”

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 labor force participation rate also fell 0.4 points to 62.7 percent and the employment-to-population ratio shrank 0.2 points to 60.2 percent — suggesting the fall in unemployment may partly reflect a dip in the size of the work force as well as job creation.

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 seven tenths of a percentage point, and more employers say positions are increasingly difficult to fill amid a scarcity of qualified labor.

“As in the late 1990s, the last time unemployment was this low, the Fed will start to sweat the potential inflation implications,” Chris Low of FTN Financial said in a client briefing.

“But any who take the time to look at the data will see the late 90s was a remarkably benign time for inflation.”

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 2.4 percent over the past 12 months, just above inflation.

In a separate report, orders to US factories rose 1.4 percent in September, the strongest gain in four months. A key category that tracks business investment plans jumped by the largest amount in more than a year.

The September gain followed a 1.2 percent advance in August, the Commerce Department reported Friday. Last month’s increase was paced by a 30.8 percent jump in demand for commercial aircraft, which swings widely from month to month.

The category that serves as a proxy for business investment plans rose 1.7 percent in August, the best showing since a 2.7 percent surge in July 2016.

Economists believe manufacturing is on a sustained rebound that will provide support for the overall economy after a prolonged stretch of weakness.

Demand for durable goods, longlasting items ranging from bicycles to battleships, rose 2 percent in September. That was a slightly smaller gain than the 2.2 percent estimate the government reported last week.

Orders for nondurable goods, items not expected to last three years, rose 0.8 percent last month, up from a 0.4 percent increase in August. The gain was led by a rise in petroleum products, a category where the gain in orders likely reflected in large part a rise in energy prices during the month.

The US trade deficit rose in September to $43.5 billion as imports grew faster than exports.

The Commerce Department said Friday that the September trade gap in goods and services was up from $42.8 billion in August. Exports rose 1.1 percent to $196.8 billion, the highest level since December 2014. But imports rose more: up 1.2 percent to $240.3 billion.

A trade deficit means that the United States is buying more goods and services from other countries than it is selling them. A rising trade gap reduces US economic growth.

Through September, the United States has run a trade gap this year of $405.2 billion, up more than 9 percent from a year earlier. The gap has widened even though a weaker dollar has made American-made products less expensive in foreign markets and encouraged exports.

President Trump views America’s massive trade deficits as a sign of economic weakness. He blames them on bad trade deals and abusive practices by China and other trade partners. Conventional economists argue that trade deficits are largely caused not by flawed trade agreements or cheating by particular countries but by a bigger economic force: Americans spend more than they produce, and imports have to fill in the gap.

Two politically sensitive trade deficits slipped in September. The US trade gap with China fell 0.7 percent to $34.6 billion, and the gap with Mexico dropped 7.7 percent to $5.7 billion.

In September, the United States ran a surplus of $21.9 billion with the rest of the world in the trade of services such as banking and tourism. But that gain was overwhelmed by a $65.4 billion deficit in the trade of goods.