Wages surge as US adds a robust 250,000 jobs in October

04 November, 2018, 22:58 | Author: Eric Barnett
  • Donald Trump

The unemployment rate remained unchanged at 3.7%.

Polls have suggested that while Americans generally approve of the economy's performance, that sentiment hasn't necessarily broadened support for President Donald Trump or Republican congressional candidates.

The president tweeted that the jobs numbers were "incredible" and urged people to "Keep it going, Vote Republican!"

The Dow Jones Industrial Average was off about 200 points, or 0.8%, at 25,193 in early afternoon after rising initially following the strong jobs news, which featured a 250,000 rise in nonfarm payrolls last month, better than 50,000 above economists' consensus guesses.

There were also big gains in manufacturing, construction and professional and business services payrolls. The estimate for September was revised downward to 118,000 job additions.

With the unemployment rate so low, many economists have expected hiring to decline as businesses face a dwindling supply of unemployed people.

The 12-month wage increase was the largest since 2009 and topped September's 2.8 percent gain. The FOMC's most recent dot-plot chart of forecasts by FOMC members, from its September meeting, has a median projection of a total four quarter-point increases from the current level.

October also marked the second month in a row that a hurricane had landed in the middle of the survey - meaning the figures could be subject to extra volatility, Ian Shepherdson of Pantheon Macroeconomics said.

USA stocks were trading mostly lower and the dollar was slightly weaker against a basket of currencies on Friday. Some of the third quarter's weakness reflected lower spending on oil and gas drilling equipment as oil prices fell.


With relatively few unemployed Americans looking for work, employers are increasingly being forced to bid up wages to poach workers from other employers or retain the ones they have. Openings exceeded 7.1 million, according to the government's most recent count.

Some analysts have tied rising pay to moves by 18 states to increase their minimum wages at the start of the year. Job growth in 2018 is averaging 213,000 new jobs per month, the strongest pace in three years. That is seen supporting the economy through at least early 2019 when gross domestic product is expected to significantly slow as the stimulus from the White House's USD1.5 trillion tax cut package fades.

The influx of new job seekers in October increased the proportion of Americans with jobs to its highest level since January 2009. The measure includes part-time workers wanting a full-time job and people who are not actively looking for work.

The share of the population in the workforce also rose 0.2% to 60.6%. Teenage unemployment dropped last month to 11.9 per cent, the lowest since 1969. Retail payrolls rose by only 2,400, likely restrained by layoffs related to Steinhoff's Mattress Firm bankruptcy as well as some store closures by Sears Holdings Corp.

Still, the rosy number benefited from a favourable comparison to October 2017, when many low-wage employees returned to work after being sideline by Hurricane Maria, bringing the average of hourly earnings back down, Shepherdson said.

The Bureau of Labor Statistics said most of the jobs occurred in health care, manufacturing, construction, and transportation and warehousing. Job gains in the sector, which accounts for about 12 per cent of the USA economy, could slow after a survey on Thursday showed a measure of factory employment fell in October.

Manufacturing output and hiring remain healthy, according to a survey by a private trade association, although increased tariffs have raised factory costs.

Despite the protectionist measures, the trade deficit continues to deteriorate. "Meanwhile, the housing sector, another weather-sensitive industry, also registered job gains this month".

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