USA job growth cools; unemployment rate drops to 3.7 percent

07 October, 2018, 18:11 | Author: Billie Castillo
  • Modal Trigger					
				AP

On Friday, the Bureau of Labor Statistics released its jobs report for September.

Economists polled by Reuters had forecast payrolls increasing by 185,000 jobs in September and the unemployment rate falling one-tenth of a percentage point to 3.8%. The National Association of Manufacturers have attributed continued growth to regulatory rollbacks and tax cuts enacted past year, and their quarterly survey shows that 73.2 percent of their members report attracting a qualified workforce to be their top business challenge. The Trump administration has imposed tariffs on imported steel and aluminum as well as on roughly half of China's imports to the United States. In fact, the wage gains most Americans are seeing are getting entirely wiped out by rising gas, rent and other prices.

Will an economy at a 3.7 unemployment rate be able to add that many jobs in the next 12 months?

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

Asian unemployment increased to 3.5 percent while white unemployment dropped to 3.3 percent, the lowest since December 1969.

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?

The tightening of the labor market is leading to a more visible acceleration in wages.

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That higher pay is likely to trim corporate profit margins, however. Investors have grown concerned about higher interest rates and the impact they might have on the economy and the stock market. It has also started calling back people who previously applied for jobs but weren't hired.

Geography, the skills gap, the opioid epidemic, more people going to college and a lack of family leave policies aimed at encouraging women to enter the labor force could all be contributing to the low rate. In August, U.S. workers saw a 2.9% wage increase from a year earlier, marking the fastest pace of growth since the recession in 2009.

"Financial and jobs numbers are fantastic".

The increase of part-time rather than full-time workers could be keeping the wages down.

Average hourly earnings rose 8 cents to $27.24, lowering the annual gain to 2.8 percent from a nine-year high of 2.9 percent in August. An Institute for Supply Management survey published this week showed robust employment gains in the services sector in September. Online retail giant Amazon.com Inc announced this week that it would raise its minimum wage to $15 per hour for US employees starting in November. This is particularly true for retail and shipping companies, which are starting to increase hiring for the holiday shopping season.

It may get an extra boost in the remaining three months of the year as a result of an influx of seasonal workers and the impact of Amazon's recent minimum wage hike. That reversed the increase from the prior week when claims were boosted by Hurricane Florence, which slammed North and SC in mid-September. In particular, hiring might have been constrained in construction and restaurants because the storm likely closed construction work sites and restaurants.

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