Published: Mon, October 08, 2018
Markets | By Erika Turner

Jobless rate for Hispanic Americans matches record low

Jobless rate for Hispanic Americans matches record low

Friday's jobs report will probably keep the Federal Reserve on track to raise short-term interest rates, economists said, with another increase expected in December.

United States job growth slowed sharply in September as Hurricane Florence depressed restaurant and retail payrolls.

As more slack is squeezed out of the labour market, economists expect annual wage growth to hit 3%.

Along with the headline employment data, markets are closely watching wage numbers, which increased last month in line with expectations.

The U.S. central bank raised rates last week for the third time this year and removed the reference in its post-meeting statement to monetary policy remaining "accommodative". Many economists see today's low rate as a continuation of the trend that began under President Barack Obama, although they think the Republican tax cuts played a role in keeping job gains strong this late in an economic expansion.

According to the Commerce Department's most recent data, consumer spending, which accounts for two-thirds of the US economy, slowed down slightly in August, while the savings rate held steady at 6.6 percent. That was not expected to move the needle on last month's wage number but served as a key anecdote on the pressure companies were under - politically and from a tight labour market - to raise wages.

The weakness in payrolls last month is not corroborated by other labor market data.

Some economists believed Hurricane Florence also may have dampened payroll gains last month.

Average hourly wage growth vs. inflation
Average Hourly Wage Growth vs. Inflation. Wall Street Journal

The unemployment rate leaves out workers who haven't sought a job in the past four weeks. Most say it's a temporary dip, blaming the effects of Hurricane Florence, which battered and flooded the Carolinas in mid-September, during the time the jobs survey is conducted.

An Institute for Supply Management survey of manufacturers published on Tuesday showed factory activity retreated from a 14-year high in September. The construction, mining, manufacturing, and logging industries added 900,000 jobs.

Hourly pay edged up 0.3 percent for the month, and is 2.8 percent higher than the same month previous year, a notch above inflation. Compared with a year ago, average hourly earnings were up 2.8%, slightly less than the 2.9% in August, owing to a tougher comparison. Service providers increased payrolls by 75 000 workers, the lowest in a year, as retail also showed a 20 000 decline.

While surveys have shown manufacturers growing more concerned about an escalating trade war between the U.S. and China, that does not appear to have affected hiring.

Economists polled by Reuters had forecast the overall trade deficit swelling to US$53.5 billion in August.

The trilateral trade agreement between the US, Canada and Mexico was salvaged in an 11th-hour deal on Sunday.

In addition, the GDP grew an estimated 4.2 percent in the second quarter, claims of unemployment insurance are the lowest since the 1960s, middle-class income is highest on record (adjusted for inflation), and small business optimism has hit one record after another since Trump's election.

Pompeo optimistic Pyongyang trip will yield U.S.-North Korea progress
Trump himself has said he is in no rush. "It looks like we'll have a second summit quite soon", he said. He is also scheduled to visit Japan (Saturday) and China (Monday) and meet his counterparts there.

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