Published: Sun, November 04, 2018
Markets | By Otis Pena

US Payrolls Rise Above-Forecast 250000 as Wage Gains Hit 3.1%

US Payrolls Rise Above-Forecast 250000 as Wage Gains Hit 3.1%

The US economy also added 250,000 jobs last month, beating expectations, while the jobless rate remained at 3.7%.

USA job growth rebounded sharply in October and wages 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.

"As long as job growth is steady, the jobless rate is low, and wages continue to edge higher, as long as we continue to keep climbing, that's the basic support that you need for the consumer", said Jennifer Lee, senior economist at Bank of Montreal in Toronto. The U.S. economy is in its 10th year of expansion, the second-longest such period on record, and October marks the 100th straight month of hiring, a record streak.

The jobs news will nearly certainly overwhelm another piece of economic news released Friday - the trade deficit in goods and services, which widened in September as imports rose more than exports. It's the first time since 2009 that wages have increased more than 3 per cent. Retail payrolls rose by only 2,400 amid declines in employment at gasoline stations and sporting goods and music stores. That's reason for the Federal Reserve to at least consider a pause in its plans to keep raising interest rates in a bid to prevent the economy from overheating.

Nonfarm payrolls probably increased by 190,000 jobs last month, according to a Reuters survey of economists.

President Donald Trump has expressed outrage at the Fed's current tightening cycle, after three hikes this year. Manufacturers added 32,000 after two months of smaller gains, defying fears that Trump's trade fights would slow hiring in that sector. That incorporates revised data for September, which saw an unusually low jobs figure thanks to Hurricane Florence. Construction expanded by 30,000 positions, almost half of which focus on residential homes. Four years ago, the Baltimore resident and Army veteran said he was working two near-minimum-wage jobs at restaurants and sleeping in a homeless shelter. A recent Pew Report showed workers' real wages-how much they can buy with their money-are actually lower than it was in the 1970s. In the early 2000s and late 1960s, wages for nonsupervisors, for which more years of data are available, were growing at a 4%-or-better annual pace. The 3.0 percent unemployment rate for individuals with some college or an associate degree is the lowest it has been since July 2001.

Trump rallies for 2018 Republicans
The heated rhetoric comes amid a final push by Republicans and Democrats to control Congress after the midterm election. Senator Jon Tester. "We're going to keep these people out of our country". "Joe will never be with us", Trump said.

Housing remains a weak spot in the economy, with sales of existing homes having fallen for six straight months as mortgage rates have risen to almost 5 per cent.

So far, manufacturing hiring does not appear to have been affected by the Trump administration's protectionist trade policy, which has contributed to capacity constraints at factories. The personal consumption expenditures price index excluding the volatile food and energy components has increased 2.0 percent for five straight months.

Even so, October's increase suggests that after a decade of anemic growth, wage growth is picking up.

There is some concern that higher wages might fuel inflation if companies turn around and increase prices for consumers.

Wages are rising solidly ahead of the rate of inflation, which is running near 2%. The Fed raised its benchmark federal-funds rate in September to a range between 2% and 2.25%, and most officials signaled they expected to lift rates by another percentage point through next year.

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