U.S. hiring accelerates, jobless rate hits six-year low
Washington (Oct 3) U.S. employers stepped up hiring in September and the jobless rate fell to a six-year low, bolstering bets on a Federal Reserve rate hike in mid-2015.
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 persistent drops in family incomes, the hiring data 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. The results showed a stronger labor market than analysts had anticipated.
"As demand is continuing to accelerate just a bit, businesses are being compelled to hire at faster pace," said Russell Price, an economist at Ameriprise Financial in Troy, Michigan.
Most investors continued to bet the Fed will wait until July to raise benchmark interest rates, which the central bank has held near zero since 2008, although bets on a June hike rose.
Yields on U.S. government debt also moved up and stocks opened higher, while the dollar continued a rally that has been in place for weeks.
The pace of hiring has stepped up this year, with the gain in payrolls over the last six months 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.
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.
There were some downsides. 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.
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.
Most economists see the economy expanding at around a 3 percent annual rate in the third quarter, well above the average over the last two years of 2.2 percent.
But solid economic growth and hiring may be insufficient for the Fed to initiate an early rate increase.
Several officials at the central bank have expressed concern that inflation remains too low, a sign economic conditions remain too loose. Fed officials next meet to review monetary policy on Oct. 28-29.
Average hourly earnings slipped a penny last month. 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.
That helped cap bets on an early rate hike.
"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 separate 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 could lead economists to raise their growth forecasts.