WASHINGTON (Nov 8): The American labour market is powering past a global slowdown as unemployment decreased to a six-year low in October and 214,000 workers were added to payrolls.
The jobless rate fell to 5.8 percent, the lowest since July 2008, from 5.9 percent in September, Labor Department figures showed today in Washington.
The increase in hiring last month followed a 256,000 advance that was larger than first estimated as job gains head for their best showing in 15 years.
The report probably keeps Federal Reserve policy makers on track to raise interest rates in 2015 even as wages continued to show little momentum.
“The labor market is firming,” Federal Reserve Bank of Chicago President Charles Evans said in a speech. “Labor-market slack is definitely diminishing.”
Evans has often warned of the dangers of raising interest rates too quickly.
Forecasts show central bankers view unemployment in the 5.2 percent to 5.5 percent range as consistent with full employment.
The rate has dropped 1.4 percentage points since October 2013, matching the biggest 12-month retreat since 1984.
Evans said the drop in joblessness was “good news”, even as “we’ve got some distance to go”.
Median forecast
The October gain in payrolls fell short of the 235,000 median forecast of 100 economists surveyed by Bloomberg.
Estimates ranged from increases of 140,000 to 314,000. Revisions to prior reports added 31,000 jobs to the previous two months’ job count.
Employment has climbed by at least 200,000 for nine consecutive months.
The last time that’s happened was a stretch that ended in March 1995.
At this year’s pace, the increase in payrolls for 2014 would be the biggest since 1999.
Hiring gains were broad-based, with factories, construction companies and retailers among those adding staff.
The one soft spot in the employment picture remains the inability of wages to show bigger increases.
Average hourly earnings for all workers rose 0.1 percent in October from the prior month, and were up 2 percent since October 2013, less than the 2.1 percent median forecast.
By this measure pay climbed 3.1 percent in the year before the recession began in December 2007.
Wages disappoint
Limited wage gains partly explain Americans’ dim perceptions of the economy, which helped Republicans capture control of the Senate from Democrats and solidify their majority in the US House during the midterm elections this week.
The results ensured that the GOP will control both chambers of Congress for the remainder of President Barack Obama's term.
When voters talk about the health of the economy, “they’re talking about their paychecks and not their stock portfolios,” said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, a Washington-based research group.
Economic growth, “while solid and reliable at this point, is not showing up in median pay in the way it needs to for people to feel reconnected to the overall improvement,” said Bernstein, a former chief economic adviser to Vice President Joe Biden.
The unemployment rate -- which includes part-time workers who’d prefer a full-time position and people who want to work but have given up looking -- declined to 11.5 percent, the lowest since September 2008, from 11.8 percent.
Fed officials cited further labour market progress last week, when they ended monthly asset purchases that bloated the central bank’s balance sheet to more than US$4 trillion in a bid to stimulate growth.
The policy making Federal Open Market Committee referenced “solid job gains and a lower unemployment rate".
Gains in employment in the US, and more recently a drop in prices at the gas pump, are helping to bolster consumer sentiment and underpin the household purchases that make up about 70 percent of the economy.
The employment report showed the share of the population with jobs rose to 59.2 percent in October, the highest since July 2009, from 59 percent the prior month.
“The US is on a roll, the momentum is pretty strong,” said Nariman Behravesh, chief economist of IHS Inc in Lexington, Massachusetts.