US job growth seen ac­cel­er­at­ing in Oc­to­ber

Ex­perts pre­dict strong an­nual wage gain

Viet Nam News - - WORLD BUSINESS -

WASH­ING­TON — US job growth likely re­bounded in Oc­to­ber, with wages ex­pected to have recorded their largest an­nual gain in 9-1/2 years, point­ing to fur­ther labour mar­ket tight­en­ing that could en­cour­age the Fed­eral Re­serve to raise in­ter­est rates again in De­cem­ber.

The Labour Depart­ment’s closely watched monthly em­ploy­ment re­port on Fri­day is also ex­pected to show the un­em­ploy­ment rate steady at a 49-year low of 3.7 per cent. Sus­tained labour mar­ket strength could ease fears about the econ­omy’s health fol­low­ing weak hous­ing data and stalling busi­ness spend­ing.

Non­farm pay­rolls prob­a­bly in­creased by 190,000 jobs last month, ac­cord­ing to a Reuters sur­vey of econ­o­mists. Pay­rolls rose by 134,000 jobs in Septem­ber, the small­est gain in a year, af­ter Hur­ri­cane Florence drenched North and South Carolina, weigh­ing on restau­rant and re­tail em­ploy­ment.

But the an­tic­i­pated bounce back in job growth is likely to be tem­pered some­what by Hur­ri­cane Michael, which struck the Florida Pan­han­dle in mid-Oc­to­ber.

“The em­ploy­ment re­port should help calm some con­cerns that the econ­omy is slow­ing more quickly than it re­ally is, the econ­omy is re­ally in good shape,” said Ryan Sweet, a se­nior econ­o­mist at Moody’s An­a­lyt­ics in Westch­ester, Penn­syl­va­nia.

Av­er­age hourly earn­ings are fore­cast ris­ing 0.2 per cent in Oc­to­ber af­ter ad­vanc­ing 0.3 per cent in Septem­ber. This would boost the an­nual in­crease in the wages to 3.1 per cent, the big­gest gain since April 2009, from 2.8 per cent in Septem­ber.

Strong an­nual wage growth would mir­ror other data pub­lished this week show­ing wages and salaries ris­ing in the third quar­ter by the most since mid2008. Hourly com­pen­sa­tion also in­creased at a brisk pace in the third quar­ter.

Firm­ing wages sup­port views that in­fla­tion will hover around the Fed’s 2.0 per cent tar­get for a while. The per­sonal con­sump­tion ex­pen­di­tures price in­dex ex­clud­ing the volatile food and en­ergy com­po­nents has in­creased 2.0 per cent for five straight months.

The Fed is not ex­pected to raise rates at its meet­ing next Wed­nes­day, but econ­o­mists be­lieve strong labour mar­ket data could see the US cen­tral bank sig­nal an in­crease in De­cem­ber. The Fed raised bor­row­ing costs in Septem­ber for the third time this year.

Wage gains

“I sus­pect that by mid-2019, labour com­pen­sa­tion gains will be at lev­els that would worry the Fed mem­bers,” said Joel Naroff, chief econ­o­mist at Naroff Eco­nomic Ad­vi­sors in Hol­land, Penn­syl­va­nia. “If that is the case, those who are hop­ing for only one or two rate hikes next year may be dis­ap­pointed.”

Em­ploy­ers, scram­bling to find qual­i­fied work­ers, are boost­ing wages. There are a record 7.14 mil­lion open jobs.

On­line re­tail gi­ant Ama­zon.com Inc an­nounced last month that it would raise its min­i­mum wage to $15 per hour for US em­ploy­ees start­ing in Novem­ber. Work­ers at United States Steel Corp are set to re­ceive a hefty pay rise also.

The prospect of in­ter­est rates ris­ing faster than fi­nan­cial mar­kets an­tic­i­pate has roiled the US stock mar­ket and a strong re­port on Fri­day could renew sell­ing on Wall Street. The Standard & Poor’s 500 in­dex dropped 6.9 per cent in Oc­to­ber, the big­gest de­cline in seven years.

Em­ploy­ment gains have av­er­aged 208,000 jobs per month this year, dou­ble the roughly 100,000 needed to keep up with growth in the work­ing-age pop­u­la­tion. That is seen sup­port­ing the econ­omy through at least early 2019 when gross do­mes­tic prod­uct is ex­pected to sig­nif­i­cantly slow as the stim­u­lus from the White House’s $1.5 tril­lion tax cut pack­age fades.

Last month, em­ploy­ment in the leisure and hos­pi­tal­ity sec­tor likely re­bounded af­ter de­clin­ing by 17,000 jobs in Septem­ber, the first drop in year.

Re­tail pay­rolls prob­a­bly re­mained weak, weighed down by lay­offs re­lated to Stein­hoff’s Mat­tress Firm bank­ruptcy as well as some store clo­sures by Sears Hold­ings Corp.

Fur­ther gains are an­tic­i­pated in man­u­fac­tur­ing jobs af­ter the sec­tor added 18,000 po­si­tions in Septem­ber, but a mea­sure of fac­tory em­ploy­ment fell last month sug­gest­ing some slow­down in the pace of hir­ing.

Con­struc­tion com­pa­nies prob­a­bly hired more work­ers in Oc­to­ber. Jobs in the sec­tor have been in­creas­ing de­spite weak­ness in the hous­ing mar­ket. Gov­ern­ment pay­rolls are ex­pected to have in­crease by 7,000 jobs in Oc­to­ber. — REUTERS

A store ad­ver­tises that they are hir­ing in lower Man­hat­tan on June 1, 2018 in New York. — Photo for­tune.com

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