US jobs growth in October falls short of forecasts

US jobs growth in October falls short of forecasts

US employers added 261,000 jobs in October, a solid gain that nevertheless fell short of expectations.Analysts had expected a sharp increase in hiring, after hurricanes Irma and Harvey depressed payroll growth in September. Wage growth was also slower than expected, while the number of people not in the labour force rose.That helped drive the US jobless rate down to 4.1% in October, the lowest rate since 2000.The US Department of Labor said employment in the food and drink industries had “increased sharply” and had mostly offset a decline in those areas in September when hurricanes devastated areas of Florida and Texas. Job numbers for September were revised up to a gain of 18,000 after initial estimates suggested that employment fell by 33,000. JJ Kinahan, chief market strategist at TD Ameritrade, said that “there was a lot to like” in the report, pointing to an increase in jobs in industries such as manufacturing and professional and business services.But economists were cautious, saying it is hard to tease out the effects of hurricane-related activity.’Where is the wage growth?’The US economy has expanded steadily in recent months, with GDP growing an estimated 3% in the most recent quarter.At the same time, job growth has slowly decelerated, with the hurricanes sharpening the effect.Economists said the earlier pace of hiring would be hard to sustain as the supply of people looking for jobs shrank. But they have been puzzled that wage growth is not stronger, as employers pay more to recruit staff.”Again it’s a case of strong jobs growth but where is the wage growth?” said Neil Wilson, senior market analyst at ETX Capital.The Labor Department said average hourly earnings for private sector employees were $26.53, nearly unchanged over the month. Earnings were up 2.4% year-on-year.Economist Jared Bernstein, former adviser to vice president Joe Biden, said the figures are a sign there is room for unemployment to fall farther. Others said the large hurricane-related swing in food and hospitality jobs – typically lower paid fields – might be affecting the numbers. “Let’s come back next month and see how wages might have evened out after the hurricane impacts,” Mr Kinahan wrote.Although October’s figures fell short of forecasts, Mr Wilson and others said the report does not alter expectations that the US Federal Reserve will raise interest rates in December.But he added: “Of concern for the Fed is that wage growth has stalled and this raises doubts about the pace of inflation growth…. Without wages going up the Fed is going to struggle to achieve its inflation target.”
Source: BBC News

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