Published: Mon, October 08, 2018
Money | By Armando Alvarado

USA unemployment rate falls but earnings inequality widens

USA unemployment rate falls but earnings inequality widens

Hurricane Florence, the storm that made landfall along the mid-Atlantic US coast on September 14, caused widespread disruption for homes and employers but it was not possible to determine the extent to which this might have depressed the September jobs numbers, officials said.

The U.S. economy added 134,000 jobs in September below analysts' expectations while the unemployment rate was 3.7 percent, the lowest since 1969. Numerous newly created jobs have been taken by independent contractors or on short-term assignments ("gig economy.") Such forms of employment are not secure, and recent analysis by Harvard University's Lawrence Katz and Alan Krueger of Princeton University, reported by Bloomberg, indicates that the US labor market is becoming more precarious.

Meanwhile, the labor force participation rate held steady at 62.7 percent, while the number of unemployed people fell by 270,000 to six million, with the largest drop among adult women. Average hourly earnings rose 0.3 per cent from the previous month.

The September Employment Report was solid despite slower than expected job growth. I expect the unemployment rate to hold at 3.9 percent. According to analysis by the BBC, the biggest growth in US job sectors was in professional and business services, healthcare and construction.

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It should also be remembered that by this time in 2008, the job market had been in a six-digit monthly free-fall for half a year. Teen unemployment fell by 0.3 percent to 12.8 percent. The manufacturing sector saw net job losses in last month's report - that's worth watching, as it relates to concerns about tariffs, but it's worth monitoring for broader economic-health concerns as well. Over the year, the unemployment rate and the number of unemployed persons declined by 0.5 percentage point and 795,000, respectively. A separate report from the Commerce Department showed that the USA trade deficit widened in August, reflecting an increase in imports and a decrease in exports.

Of the added jobs, 1,000 were full time and 2,300 were part time.

The tightening of the labor market is leading to an increase in wages.

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