US unemployment rate hits lowest level since 1969

US job growth slowed sharply in September, in part as Hurricane Florence depressed restaurant and retail payrolls. But the unemployment rate fell to near a 49-year low of 3.7 per cent, pointing to a further tightening in labour market conditions.

The US labour department’s closely watched monthly employment report on Friday also showed a steady rise in wages, suggesting moderate inflation pressures, which could ease concerns about the economy overheating and keep the Federal Reserve on a path of gradual interest rate increases.

Nonfarm payrolls increased by 134,000 jobs last month, the fewest in a year, as the retail and leisure and hospitality sectors shed employment.

Data for July and August were revised to show 87,000 more jobs added than previously reported. The economy needs to create roughly 120,000 jobs per month to keep up with growth in the working-age population.

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“The weaker gain in payrolls in September may partly reflect some hit from Hurricane Florence,” said Michael Pearce, senior US economist at Capital Economics in New York. “There is little in this report to stop the Fed continuing to raise interest rates gradually.”

Economists polled by Reuters had forecast payrolls increasing by 185,000 jobs in September and the unemployment rate falling one-tenth of a percentage point to 3.8 per cent.

Meanwhile, average hourly earnings rose 0.3 per cent month-on-month and 2.8 per cent year-on-year in line with expectations. That was slower than the 2.9 per cent rise in August – the swiftest increase in wages in nine years.

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

Retail payrolls dropped by 20,000 jobs in September. Manufacturing payrolls increased by 18,000 in September after rising by 5,000 in August. Construction companies hired 23,000 more workers last month after increasing payrolls by 26,000 jobs in August.

Professional and business services employment increased by 54,000 jobs last month and government payrolls rose 13,000. – Reuters