USA unemployment falls to 48-year low in September

Daniel Fowler
October 6, 2018

Compared with a year ago, average hourly earnings were up 2.8%, slightly less than the 2.9% in August, owing to a tougher comparison.

Many economists have forecast that Hurricane Florence, which flooded parts of North and SC last month, depressed September's job growth by roughly 30,000.

The U.S. central bank raised rates last week for the third time this year and removed the reference in its post-meeting statement to monetary policy remaining "accommodative".

That run has added almost 20 million people to the nation's payrolls since the Great Recession, which cost almost 9 million their jobs.

Numerous dislocated people will probably return to work.

Wages have grown 2.8 percent over the a year ago, down from last month's estimate of 2.9 percent. The unemployment rate is forecast falling one-tenth of a percentage point to 3.8 percent, an 18-year low first hit in May.

The good news is the previous two months' gains were revised up by a combined 87,000 jobs, boosting the monthly average for the past year to a robust 211,400 jobs. The average workweek was unchanged at 34.5 hours in September. Inadequate earnings, low productivity and hard conditions of work which undermines the workers' fundamental rights often act as indicators of vulnerable employment which self-employment and those working at family-run establishments are at risk of falling under the category.

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.

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The economy does show some weak spots. Americans are confident about the economic outlook, buoyed by the job gains and signs of higher pay.

Following this report, stock futures were lower, but little-changed, while Treasury yields were still near their highs of the week with the 10-year Treasury sitting near 3.21% and the 30-year near 3.38%. While that's still lower than what economists would expect with a rock-bottom unemployment rate, it's an improvement from the 2.0 percent growth seen at the start of this year.

Amazon's announcement this week that it would increase its minimum hourly wage to $15 for all its USA employees elevated the pressure on other employers to lift their wages as well.

Wage growth remains sufficient to keep inflation around the Fed's 2% target.

Retail payrolls dropped by 20,000 jobs last month, the figure also revealed.

Despite newly-imposed tariffs on steel and aluminum, manufacturing added another 18,000 jobs. The duration measures of unemployment also all showed increases in the month, with average duration increasing by 1.4 weeks to 24.0 weeks, the longest period since March.

While surveys have shown manufacturers growing more concerned about an escalating trade war between the United States and China, that does not appear to have affected hiring. In fact, the Fed's latest survey of national business conditions reflected concerns about labor shortages that are extending into non-skilled occupations as much as about tariffs.

A rising number of companies are converting part-timers who have wanted more hours to full-time workers and are posting more full-time jobs.

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