US Economy: Pay Grows Since 2009 and Adds 250,000 New Jobs

Mae Love
November 4, 2018

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United States job growth likely rebounded in October, with wages expected to have recorded their largest annual gain in 9-1/2 years, pointing to further labor market tightening that could encourage the Federal Reserve to raise interest rates again in December.

Stock and bond prices moved lower after the Bureau of Labor Statistics issued a strong-than-expected employment report for October, which bolsters the case for the Federal Reserve to push ahead with interest-rate increases this year and next.

William Stoller, chairman and chief executive of Express Employment Professionals, which is based in Oklahoma City, said pay in light industrial and administrative jobs, for example, had climbed to $14.50 to $15.50 an hour, from roughly $13.60 a year ago.

For all the positive news, these trends have caused many economists to forecast slower growth in the final months of this year and into 2019.

The influx of new job seekers in October increased the proportion of Americans with jobs to its highest level since January 2009.

For a USA economic expansion now in its 10th year, hiring remains robust, growth has picked up and the outlook is a mostly bright one on the eve of congressional elections.

The year-over-year change reflects possibly storm-boosted figures in October and storm-depressed numbers the prior year, though companies have also been steadily raising pay to attract and retain workers. Though economists have predicted that hiring will eventually slow as the pool of unemployed Americans dwindles, there's no sign of that happening yet.

From September 2017 to last September, the state's private sector job count increased by 109,500.

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For Republicans, the good news about the economy has mostly been drowned out during the election campaign by Trump's focus on immigration and his attacks on Democrats, both of which energize the president's core supporters. The Fed is expected to raise rates for a fourth time this year in December, and economists expect at least two further increase next year. The Labor Department said Hurricane Michael, which struck Florida last month, "had no discernible effect" on the latest figures. Healthcare and social services employers added 46,700 jobs, up from a gain of 34,900 in September. Construction expanded by 30,000 positions, almost half of which focus on residential homes.

Retailers barely hired, adding just 2,400 positions, possibly reflecting the Sears bankruptcy. A recent Pew Report showed workers' real wages-how much they can buy with their money-are actually lower than it was in the 1970s.

Year-over-year wage growth above 3 percent for the first time in almost a decade.

A measure of compensation that includes benefits and covers all workers, including government employees, rose 2.8 percent in the third quarter from a year earlier, the Labor Department report said.

Some of the strong payrolls growth came from a slight downward revision to September's number, but overall it lifts the average over the past 12 months to 211,000.

The labor force participation rate increased by 0.2 percentage point to 62.9 percent in October. Economists expected wages to rise 0.2% over last month and 3.1% over previous year.

There is some concern that higher wages might fuel inflation if companies turn around and increase prices for consumers.

"The updated information released today suggests that the labor market remains strong and inflation remains manageable, supporting our call that the Fed will raise its key policy rate in December", Duncan said.

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