Published: Sun, October 07, 2018
Money | By Armando Alvarado

United States unemployment falls to 48-year low in September

United States unemployment falls to 48-year low in September

At the same time the unemployment rate came in at 3.7%, down significantly from August.

If the rate keeps dropping, it will heighten two concerns: Has the economy soaked up almost all the people who want or are able to work?

US Federal Reserve Chairman Jerome Powell said earlier this week that the economy's outlook was "remarkably positive" and he believed it was on the cusp of a "historically rare" era of ultra-low unemployment and tame inflation. Pointing to the economy's health, the Fed last week raised its benchmark short-term rate and predicted that it would continue to tighten credit into 2020 to manage growth and inflation.

Andrew Grantham, senior economist at CIBC described September's employment report as "solid", despite the weaker than expected headline number.

Nonfarm payrolls likely increased by 185,000 jobs last month after surging 201,000 in August, according to a Reuters survey of economists.

What's more, the government today revised sharply up its estimate of hiring for July and August by 87,000 jobs. Almost 300,000 workers told the BLS that bad weather kept them away from their jobs, most likely in industries like hospitality in which they're paid only if they show up. "T$3 he official data only include people who were paid something - anything - in the survey period".

While economists cheered the unemployment rate, only 134,000 jobs were created in September, which was well below the consensus prediction of 180,000.

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The household survey showed 299,000 people reported staying at home in September because of the weather, while 1.489 million employees worked part-time because of the weather.

Average US hourly earnings increased eight cents, or 0.3%, in September after rising 0.3% in the previous month. Average hourly earnings rose 2.8 percent over the year, slightly above the average over the past year but down from last month's increase.

Wage growth remains sufficient to keep inflation around the Fed's 2 percent target. On average, businesses added almost 200,000 jobs per month this year - well above the number needed to keep up with a growing population. "While that annual rate is a tick lower than the prior month, there is a soft monthly print falling out of the calculation next month and as such wage growth could soon break above 3% for the first time". The average workweek was unchanged at 34.5 hours.

While surveys have shown manufacturers growing more concerned about an escalating trade war between the U.S. and China, that does not appear to have affected hiring.

This comes despite United States president Donald Trump's tariffs on goods from countries including China and those of the European Union.

Manufacturers, which are more dependent on foreign markets than other industries, added 18,000 jobs last month, a sign that President Donald Trump's trade fight with China and other countries is having little effect on hiring. Leisure and hospitality positions were down 17,000.

Retailers had the worst month for hiring, as the sector lost 20,000 jobs.

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