February 19, 2019

The unemployment rate is the lowest it’s been since 1969. Here’s why

07 October 2018, 09:50 | Joann Bryant

The American Economy Added Just 134,000 Jobs in September Unemployment Drops to Lowest Level Since 1969 AFP5 Oct 2018

The American Economy Added Just 134,000 Jobs in September Unemployment Drops to Lowest Level Since 1969		AFP5 Oct 2018

That should keep the Federal Reserve on its present path of continuing to lift short-term interest rates, including another 0.25 percentage point increase widely anticipated in December.

If the rate keeps dropping, it will heighten two concerns: Has the economy soaked up almost all the people who want or are able to work?

Unemployment fell to a 48-year-low of 3.7 percent last month from 3.9 percent, an unusually large drop, according to the Labor Department's closely-watched monthly jobs report.

Fed Chairman Jerome Powell said on Tuesday that the economy's outlook was "remarkably positive" and he believed it was on the cusp of a "historically rare" era of ultra-low unemployment and tame inflation.

"The acceleration in job gains this year is extraordinary in an environment where firms are having great difficulty finding qualified candidates", said Stephen Stanley, chief economist at Amherst Pierpont Securities.

The economy added 134,000 jobs in September while previous estimates were revised up from 147,000 to 165,000 for July and from 201,000 to 270,000 for August, the Bureau of Labor Statistics (BLS) reported on October 5.

"That said, 134,000 job is far from a awful employment number and with August's being revised up by another 69,000, the labour market looks extremely healthy and provides further evidence of a booming economy".

Payrolls are calculated from a survey of employers, which treats any worker who was not paid for any part of the pay period that includes the 12th of the month as unemployed. Economists have forecast that growth reached a 3 percent to 3.5 percent annual rate in the July-September quarter.

Revisions added a total of 87 000 jobs to payrolls in the previous two months, according to the figures, resulting in a three-month average of 190 000. If more people start looking - and don't immediately find a job - the government will count them as unemployed.

The Labour Department said 299 000 people weren't at work due to bad weather, reflecting the storm's impact.

Last month, average hourly pay increased 2.8 percent from a year earlier, one tick below the year-over-year gain in August.

Average hourly earnings are forecast to have increased 0.3 percent in September after leaping 0.4 percent in the prior month.

Wage growth remains sufficient to keep inflation around the Fed's 2 percent target. This is the lowest it has ever been, with the exception of May when it hit 5.9 percent.

The escalating trade war between the United States and China does not appear to have affected hiring in factories.

Washington last month slapped tariffs on $200 billion worth of Chinese goods, with Beijing retaliating with duties on $60 billion worth of USA products.

This comes despite U.S. president Donald Trump's tariffs on goods from countries including China and those of the European Union. The September gain extended an 8½-year streak of monthly job growth.

Employment in the leisure and hospitality sector fell by 17,000 jobs, the first drop since September 2017.

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