The United States Labour Department released its official hiring and unemployment figures for September on Friday, providing the latest snapshot of the American economy.
An eight-year recovery makes the labour market tight. The unemployment rate fell to a nearly five-decade low in September, punctuating a remarkable rebound in the ten years after the collapse of Lehman Brothers set off a global financial crisis.
The 134 000 jobs that employers added in September reflected the slowest pace of growth in a year, and the growth in wages cooled slightly from August.
But there is little evidence that those mildly disappointing figures suggest a broader slowdown. The report on Friday extended the current run of monthly job growth to eight straight years, double the previous record.
By nearly any measure, today’s labour market is the strongest since the dot-com boom of the late 1990s and early 2000s. Job growth has repeatedly defied economists’ predictions of a slowdown.
African-Americans, Latinos and members of other groups that often face discrimination are experiencing some of their lowest rates of joblessness on record.
“I view this as the strongest labour market in a generation,” said Andrew Chamberlain, chief economist at the career site Glassdoor. “These really are the good times.”
The current economic expansion is already one of the longest on record, and there is no sign that it is losing steam.
Economic output last quarter increased at its fastest pace in four years, and the current quarter looks strong as well. Yields on United States government bonds have risen sharply in recent days, an indication that investors expect faster growth, and more inflation, in coming years.
Where is the wage growth?
For months, the one knock on the economy has been that strong hiring has not yet translated into robust pay gains for many workers. There are signs that could finally be changing.
The 2,8 percent increase in average hourly earnings last month compared with a year earlier was down slightly from the 2,9 rate in August. But earnings growth has drifted upward in recent months, and other measures show stronger growth.
Workers at the bottom of the earnings ladder are seeing particularly strong growth: Amazon announced this week that it would raise the minimum wage for all of its employees in the United States to at least $15 an hour.
Amy Glaser heard the Amazon news on television while preparing for a meeting with a rival e-commerce firm.
Ms Glaser, a senior vice president at the staffing firm Adecco, helps companies hire for the holiday season, a task that Amazon had just made even more difficult.
“There was definitely a feeling of concern,” Ms Glaser said. “It puts increased pressure on them in a market where they already knew they were going to have to make significant adjustments on wages.”
Higher pay alone may not be enough. The combination of a tight labour market and rapidly growing online sales has made the competition for warehouse workers particularly fierce this year.
Ms Glaser said that companies were moving up their hiring time lines, easing job requirements and giving workers more control over their schedules, a big shift in an industry where employees have traditionally been expected to show up when and where they were needed.
“The demand for workers is higher than ever and the supply just isn’t out there right now,” Ms Glaser said.
A ‘Goldilocks’ report?
Low unemployment and faster wage growth are good news for workers, but policymakers at the Federal Reserve are watching warily for signs that the economy is “overheating” — that the tight labour market and strong economy are sowing the seeds for faster inflation down the road. If those concerns mount, the Fed might raise interest rates more quickly than planned, which could bring the recovery to an end.
Friday’s report should ease those fears because the jobless rate fell sharply without bringing a sharp rise in wage growth. That suggests employers are still finding the workers they need.
“I think the Fed is going to really like this report,” said Michelle Meyer, head of United States economics for Bank of America Merrill Lynch.
“This report will not prompt them to have to make the hard decision to think about going faster” on rate hikes.
The report appears to fit with recent comments from Jerome H. Powell, the Fed chairman, who said this week that the economy was good but “not too good to be true.”
Hurricane Florence may have caused some distortions
Some economists had warned that the numbers for September might be skewed by the effects of Hurricane Florence, which hit the Carolinas in the middle of the month. But the report released on Friday suggests the storm’s impact may have been muted.
The Bureau of Labour Statistics said survey response rates were “within normal ranges.” About 300 000 people reported being not at work because of bad weather — more than in a typical month, but far below the 1,5 million kept out of work a year ago, when hurricanes hit Florida and Texas.
Florence affected a smaller part of the country than last year’s storms did, and hit at a time in the month when it was less likely to disrupt data collection or measurement. Still, the storm could help explain the slowdown in job growth in September.
The retail and hospitality sectors, which are particularly sensitive to bad weather, cut a combined 37,000 jobs. Economists also cautioned that the storm might have muddied measures of earnings and working hours, at least in some industries.
Washington is watching
The report on Friday was one of the last major economic releases before November’s midterm elections. The next round of jobs data will come four days before Election Day, and most voters’ minds may be made up by then.
Republicans are counting on a strong economy to help hold off a potential “blue wave” of Democratic victories in the House and Senate.
President Trump has repeatedly played up the low unemployment rate as evidence that his policies are working. On Friday, he cheered the report on Twitter.
It is not clear, however, that economic data will have much effect at the polls. Surveys show that views of the economy are split along partisan lines, with Democrats and even many independents expressing less optimism than Republicans. — New York Times.