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Home / Business / Employment growth in the US has accelerated; Strong annual wage growth expected

Employment growth in the US has accelerated; Strong annual wage growth expected



WASHINGTON (Reuters) – Employment growth in the US was likely to recover in October, with wages likely to record their highest annual profits in 9½ years. This indicates a further streamlining of the labor market, which could stimulate the Federal Reserve to raise interest rates again in December.

While the Executive Branch Job Fair, hosted by the Conservative Partnership Institute at the Dirksen Senate office building in Washington, USA, on June 1

5, 2018, people wait in line at a booth. REUTERS / Toya Sarno Jordan [19659003] The labor department is tight Friday's monthly employment report is expected to keep the unemployment rate stable at a 49-year low of 3.7 percent. Continued strength in the labor market could alleviate fears over the health of the economy after housing data was weak and corporate spending stalled.

According to a Reuters survey of economists, the number of non-farm levies last month probably increased by 190,000. The number of employees increased by 134,000 in September. This is the smallest increase since the year after Hurricane Florence drenched North and South Carolina and negatively impacted hospitality and retail employment.

But the expected upswing in employment growth is likely to be mitigated by Hurricane Michael, who hit the Florida Panhandle in mid-October.

"The employment report should help alleviate some concerns that the economy is slowing down faster than it really is, and the economy is really in good shape," said Ryan Sweet, a senior economist at Moody's Analytics in Westchester, Pennsylvania.

Average hourly earnings are expected to increase by 0.2 percent in October, after rising 0.3 percent in September. This would increase the annual increase in wages to 3.1 percent, the largest increase since April 2009 of 2.8 percent in September.

Strong annual wage growth reflects other data released this week, showing that wages and salaries will rise the most in the third quarter since mid-2008. Hourly compensation also increased rapidly in the third quarter.

Fixed wages support the view that inflation will hover around the Fed's 2.0 percent target for a while. The personal consumption price index excluding the volatile food and energy components rose 2.0 percent in five months.

The Fed is not expected to raise interest rates at its meeting next Wednesday. However, economists predict that US central bank data in December could be signaled by strong labor market data. The Fed raised its borrowing costs in September for the third time this year.

STRONG WAGE GAINS

"I expect that in mid-2019 pay rises will be at a level that would worry Fed members," said Joel Naroff, chief economist at Naroff Economic Advisors, Holland, Pennsylvania. "If that's the case, those who hope for only one or two interest rate hikes next year could be disappointed."

Employers looking for skilled workers increase their wages. There is a record of 7.14 million open jobs.

Online retailer Amazon.com Inc. announced last month to raise the minimum wage for US employees to $ 15 per hour from November. Workers at United States Steel Corp. will also receive a considerable salary increase.

The prospect that interest rates will rise faster than expected by the financial markets has hurt the US stock market, and a strong report on Friday could renew the sale on Wall Street. Standard & Poor's 500 index fell 6.9 percent in October, the biggest drop in seven years.

Employment growth averaged 208,000 jobs per month this year, twice as high as around 100,000 to reach the working-age population growth. This will support the economy, at least until the beginning of 2019, if gross domestic product is expected to slow down significantly as the stimulus from the White House tax cut package slips $ 1.5 trillion.

Last month, employment in the leisure and hotel industry has probably rebounded after a drop of 17,000 jobs in September, the first drop in the year.

Retailing in the retail sector was likely to remain weak, impacted by layoffs related to the bankruptcy of Mathers Firm of Steinhoff and some closing of stores by Sears Holdings Corp.

Further growth expected after the sector created 18,000 jobs in September A portion of factory employment declined last month, indicating a slowdown in recruitment.

Construction companies probably hired more workers in October. The jobs in the industry have increased despite the weakness of the residential real estate market. The number of civil servants is expected to increase by 7,000 in October.

Chart: US Wage Growth – tmsnrt.rs/2P2bNQJ

Reporting by Lucia Mutikani; Editing by Clive McKeef

Our Standards: The Thomson Reuters Trust Principles.

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