|
 Friday's report on employment is the most significant gauge of the
economy's health ahead of Nov. 4 congressional elections.
While President Barack Obama's message of an improving economy has
been hampered by weakness in wages that persisted through last
month, the data nevertheless underscored the strides the labor
market has made this year.
U.S. non-farm payrolls rose by 248,000 last month and the jobless
rate fell two-tenths of a point to 5.9 percent, the lowest since
July 2008, the Labor Department said.
"Today's jobs report shows, at long last, what employment growth
looks like in a balanced economic expansion," said Robert Shapiro,
an economist at Sonecon.
The data was generally stronger than Wall Street analysts had
anticipated, and investors doubled down on bets the Fed will raise
interest rates in mid-2015. The central bank has kept benchmark
rates near zero since 2008 to encourage investment and hiring.
Most of Wall Street's top bond firms still see the Federal Reserve
starting to raise interest rates no later than June of next year and
said the bond market was under-pricing the risk that the U.S.
central bank may move more aggressively once it starts tightening
policy, a Reuters survey showed on Friday.
Still, analysts noted the report bore a large caveat in the form of
persistently stagnant wages. Average hourly earnings actually
slipped a penny last month.
MOMENTUM GROWING
While weak wage growth is keeping Fed policymakers cautious about
the timing of their first rate hike, the pace of hiring has stepped
up significantly this year. The gain in payrolls over the last six
months was the strongest for any six-month period since before the
2007-09 recession.
In a further sign of strength, 69,000 more jobs were created in July
and August than previously estimated.
U.S. stocks rose and yields on U.S. government debt moved up, while
the dollar continued a rally that has been in place for weeks.
The employment gains last month were broad-based.
Factories payrolls, which had fallen in August, expanded by 4,000
workers. The retail sector added 35,300 jobs, a big bounce back that
the government said reflected an end to employment disruptions at a
grocery chain in New England.
Construction and healthcare payrolls also notched solid gains.
There were some downsides, even outside the weakness in wages.
Notably, part of the decline in the unemployment rate was because
workers left the labor force. The share of the population with jobs
or hunting for one fell to 62.7 percent, its lowest level since
1978.
[to top of second column]
|
That rate has declined in recent years as more workers have retired
and as people have given up job hunts due to a weak economy.
Still, a measure of unemployment that partially takes into account
worker discouragement fell to 11.8 percent, its lowest level since
October 2008.
The number of people who held part-time jobs but wanted full-time
work declined slightly to 7.1 million, a sign of slow progress that
will be eyed closely by Fed officials as they seek to gauge how much
slack remains in the labor market.
In a sign the economy's expansion is moderating from the second
quarter's torrid pace, a separate report showed growth in the U.S.
services sector eased in September.
Most economists see the economy growing at around a 3 percent annual
rate in the third quarter, down from the 4.6 percent rate notched in
the April-June quarter but still well above the average over the
last two years of 2.2 percent.
Recent signs of vigor in the economy, however, may be insufficient
for the Fed to initiate an early rate increase.
Over the past 12 months, hourly earnings were up only 2.0 percent,
in line with what has been seen over the past few years and a slight
deceleration from August.
"It was a good report but I don't think it changes the Fed
dynamics," said Kim Rupert, a managing director at Action Economics
in San Francisco. "I still think the first rate hike is maybe
mid-year."
In a third report, the Commerce Department said the U.S. trade gap
unexpectedly narrowed in August to its smallest level in seven
months on an increase in exports, which led some economists to raise
their growth forecasts.
(Reporting by Jason Lange; Additional reporting by Herb Lash and
Michael Connor in New York; Editing by Andrea Ricci and Meredith
Mazzilli)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
