With 8 years of U.S. job gains, unemployment is lowest since 1969

By guest author  Ben Casselman from the New York Times

“The Labour Department released its official hiring and unemployment figures for September on October 5, 2018 , providing the latest snapshot of the American economy

134,000 jobs were added last month. Wall Street economists had expected an increase of about 168000, according to MarketWatch.

■The unemployment rate was 3.7 percent, the lowest since 1969.

 

■ Average earnings rose by 8 cents an hour and are up 2.8 % over the past year.

■ Hiring figures for July and August were revised up by a combined 87000 jobs.

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 ten years after the collapse of Lehman Brothers set off a global financial crisis.

Employers added 134000 jobs in September, the slowest pace of growth in a year, and wage growth cooled slightly from August. But, there is little evidence that those mildly disappointing figures mark a larger slowdown. Friday’s report marks eight straight years of monthly job growth, 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 other groups that often face discrimination are experiencing some of their lowest rates of joblessness on record.

“I view this as the strongest labor market in a generation,” said Andrew Chamberlain, chief economist at the career site Glassdoor. “These really are the good times.”

Where is the wage growth?

Those good times, however, have not yet translated into robust pay gains for many workers. The slow pace of wage growth has been a persistent source of disappointment in the recovery, and economists have long looked for evidence that the tight labour market is at last forcing companies to hand out raises.

“We are seeing some acceleration in average hourly earnings, maybe not as much as we would expect given how tight labor markets are,” said Ben Herzon, an economist for Macroeconomic Advisers.

The long-awaited pickup may already have begun. Amazon announced this week that it would raise wages for all its employees in the United States to at least USD 15 an hour.

But, while faster wage growth would be good news for workers, it could worry policymakers at the Federal Reserve, who are watching for signs that the economy is “overheating” — that is, 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.

So far, there is not much evidence of that happening. The Fed raised interest rates last month as expected, but has thus far been content to move slowly. Jerome Powell, the Fed Chairman, said this week that the economy was good but “not too good to be true.”

Hurricane Florence may have caused some distortions.

Take extra care interpreting September’s jobs figures because of Hurricane Florence, which hit the Carolinas in the middle of the month. Natural disasters can affect employment numbers in various ways: interfering with data collection, disrupting hiring and putting people temporarily out of work as businesses shutter and residents evacuate.

Last year, the storms that hit Florida and Texas wreaked havoc on September’s employment data. The government’s initial report showed an unexpected net loss of jobs for the month; that figure was later revised up to show a tiny gain. Roughly 1.5 million people reported being unable to work because of the weather.

This year, the impact was probably more modest. Florence affected a smaller part of the country than last year’s storms, and hit at a time in the month when it is less likely to disrupt data collection or measurement. Still, the storm may have muddied measures of earnings and working hours.

Midterm elections are approaching

Friday’s report is 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, by which point most voters’ minds may be made up.

Republicans are counting on the 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. 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.

www.nytimes.com