The Jim Bakker Show

U.S. job growth jumps; annual wage gain largest since 2009

People wait in line at a stand during the Executive Branch Job Fair hosted by the Conservative Partnership Institute at the Dirksen Senate Office Building in Washington, U.S., June 15, 2018. REUTERS/Toya Sarno Jordan

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth rebounded sharply in October and wages 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.

The Labor Department’s closely watched monthly employment report on Friday also showed the unemployment rate steady at a 49-year low of 3.7 percent as 711,000 people entered the labor force, in a sign of confidence in the jobs market.

Sustained labor market strength could ease fears about the economy’s health following weak housing data and stalling business spending. President Donald Trump cheered the robust report, which came less than a week before the midterm elections that will decide who controls the U.S. Congress.

“These are incredible numbers,” Trump tweeted.

Nonfarm payrolls increased by 250,000 jobs last month as employment in the leisure and hospitality sector bounced back after being held down by Hurricane Florence, which drenched North and South Carolina in mid-September.

There were also big gains in manufacturing, construction and professional and business services payrolls. Data for September was revised to show 118,000 jobs added instead of the previously reported 134,000.

Economists polled by Reuters had forecast payrolls increasing by 190,000 jobs in October and the unemployment rate unchanged at 3.7 percent. The Labor Department said Hurricane Michael, which struck the Florida Panhandle in mid-October, “had no discernible effect on the national employment and unemployment estimates for October.”

Average hourly earnings rose five cents, or 0.2 percent, in October after advancing 0.3 percent in September. That boosted the annual increase in wages to 3.1 percent, the biggest gain since April 2009, from 2.8 percent in September.

Employers also increased hours for workers last month. The average workweek increased to 34.5 hours from 34.4 hours in September.

“The report shows a booming U.S. economy with a sufficient whiff of wage inflation to keep the Fed on track to raise rates in December and at least twice next year,” said David Kelly, chief global strategist at JPMorgan Funds in New York.

Strong annual wage growth mirrors other data published this week showing wages and salaries rising in the third quarter by the most since mid-2008. Hourly compensation also increased at a brisk pace in the third quarter.

Firming wages support views that inflation will hover around the Fed’s 2.0 percent target for a while. The personal consumption expenditures price index excluding the volatile food and energy components, which is the Fed’s preferred inflation measure, has increased by 2.0 percent for five straight months.

The Fed is not expected to raise rates at its policy meeting next week, but economists believe October’s strong labor market data could see the U.S. central bank signal an increase in December. The Fed raised borrowing costs in September for the third time this year.

U.S. stocks were trading mostly lower and the dollar was slightly weaker against a basket of currencies on Friday. Prices of U.S. Treasuries were lower.

WORKER SHORTAGE

Employers, scrambling to find qualified workers, are boosting wages. There are a record 7.14 million open jobs.

Online retail giant Amazon.com Inc announced last month that it would raise its minimum wage to $15 per hour for U.S. employees starting in November. Workers at United States Steel Corp are set to receive a hefty pay rise also.

Employment gains have averaged 218,000 jobs per month over the past three months, double the roughly 100,000 needed to keep up with growth in the working-age population.

That is seen supporting the economy through at least early 2019 when gross domestic product is expected to significantly slow as the stimulus from the White House’s $1.5 trillion tax cut package fades.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, increased two-tenths of a percentage point to 62.9 percent last month.

A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, fell to 7.4 percent last month from 7.5 percent in September. The employment-to-population ratio rose two-tenths of percentage point to 60.6 percent, the highest since January 2009.

Last month, employment in the leisure and hospitality sector increased by 42,000 jobs after being unchanged in September. Retail payrolls rose by only 2,400, likely restrained by layoffs related to Steinhoff’s Mattress Firm bankruptcy as well as some store closures by Sears Holdings Corp.

Construction companies hired 30,000 more workers in October. Jobs in the sector have been increasing despite weakness in the housing market. Government payrolls rose by 4,000 jobs in October.

Manufacturing employment increased by 32,000 jobs in October after adding 18,000 positions in September. Job gains in the sector, which accounts for about 12 percent of the U.S. economy, could slow after a survey on Thursday showed a measure of factory employment fell in October.

So far, manufacturing hiring does not appear to have been affected by the Trump administration’s protectionist trade policy, which has contributed to capacity constraints at factories. The United States is locked in a bitter trade war with China as well as tit-for-tat tariffs with other trade partners, including the European Union, Canada and Mexico.

Despite the protectionist measures, the trade deficit continues to deteriorate. In a separate report on Friday, the Commerce Department said the trade gap increased 1.3 percent to $54.0 billion in September, widening for a fourth straight month.

(Reporting by Lucia Mutikani; Editing by Clive McKeef and Paul Simao)

U.S. job growth slows in July, unemployment rate dips

FILE PHOTO: People wait in line to attend TechFair LA, a technology job fair, in Los Angeles, California, U.S., January 26, 2017. REUTERS/Lucy Nicholson

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth slowed more than expected in July as employment in the transportation and utilities sectors fell, but a drop in the unemployment rate suggested that the labor market was tightening.

Nonfarm payrolls increased by 157,000 jobs last month, the Labor Department said on Friday. The economy created 59,000 more jobs in May and June than previously reported and needs to generate about 120,000 jobs per month to keep up with growth in the working-age population.

The unemployment rate fell one-tenth of a percentage point to 3.9 percent in July, even as more people entered the labor force in a sign of confidence in their job prospects. The low unemployment rate could allow the Federal Reserve to raise interest rates again in September.

The jobless rate had risen in June from an 18-year low of 3.8 percent in May. Economists polled by Reuters had forecast nonfarm payrolls increasing by 190,000 jobs last month and the unemployment rate falling to 3.9 percent.

The slowdown in hiring last month likely is not the result of trade tensions, which have escalated in recent days, but rather because of a shortage of workers. There are about 6.6 million unfilled jobs in the nation. A survey of small businesses published on Thursday showed a record number in July of establishments reporting that they could not find workers.

According to the NFIB, the vacancies were concentrated in construction, manufacturing and wholesale trade industries. Small businesses said they were also struggling to fill positions that did not require skilled labor.

The Fed’s Beige Book report last month showed a scarcity of labor across a wide range of occupations, including highly skilled engineers, specialized construction and manufacturing workers, information technology professionals and truck drivers.

The shortage of workers is steadily pushing up wages.

Average hourly earnings increased seven cents, or 0.3 percent, in July after gaining 0.1 percent in June. The annual increase in wages was unchanged at 2.7 percent in July.

U.S. stock market futures dipped after the data while the dollar <.DXY> fell against a basket of currencies. Prices of U.S. Treasuries were slightly higher.

TRADE TENSIONS

President Donald Trump’s administration has imposed duties on steel and aluminum imports, provoking retaliation by the United States’ trade partners, including China, Canada, Mexico and the European Union. It has also slapped 25 percent tariffs on $34 billion worth of Chinese imports.

Beijing has fought back by slapping tariffs on U.S. exports to China. On Friday, China’s Commerce Ministry said a new set of proposed import tariffs on $60 billion worth of U.S. goods are rational and restrained and warned that it reserves the right of further countermeasures in the intensifying trade war.

On Wednesday, Trump proposed a higher 25 percent tariff on $200 billion worth of Chinese imports.

Economists have warned that the tit-for-tat import duties, which have unsettled financial markets, could undercut manufacturing through disruptions to the supply chain and put a brake on the strong economic growth.

There have also been concerns that the trade tensions could dampen business confidence and lead companies to shelve spending and hiring plans. But a $1.5 trillion fiscal stimulus, which helped to power the economy to a 4.1 percent annualized growth pace in the second quarter, is assisting the United States in navigating the stormy trade waters.

The Fed left interest rates unchanged on Wednesday while painting an upbeat portrait of both the labor market and economy. The U.S. central bank said “the labor market has continued to strengthen and economic activity has been rising at a strong rate.” It increased borrowing costs in June for the second time this year.

The moderation in employment gains and steady wage growth could ease concerns about the economy overheating, and keep the Fed on a gradual path of monetary policy tightening.

The Fed’s preferred inflation measure, the personal consumption expenditures (PCE) price index excluding the volatile food and energy components, increased 1.9 percent in June. The core PCE hit the central bank’s 2 percent inflation target in March for the first time since December 2011.

Manufacturing payrolls rose by 37,000 jobs last month after increasing by 33,000 in June. Construction companies hired 19,000 more workers after increasing payrolls by 13,000 jobs in June. Retail payrolls rebounded by 7,100 jobs last month after losing 20,200 in June.

Education and health services added 22,000 jobs last month, the fewest since October 2017, after boosting payrolls by 69,000 jobs in June. July’s slowdown in hiring reflected a loss of 10,800 education services jobs.

Transportation payrolls dropped by 1,300 jobs last month, with transit and ground transportation employment declining by 14,800 jobs. Utilities employment fell for a third straight month and the finance and insurance industry shed 9,400 jobs last month.

Government employment fell by 13,000 jobs in July.

(Reporting by Lucia Mutikani; Editing by Jonathan Oatis and Paul Simao)

Wall Street edges higher as strong jobs data offsets trade worries

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 28, 2018. REUTERS/Brendan McDermid

By Sruthi Shankar and Savio D’Souza

(Reuters) – U.S. stocks edged higher on Friday on stronger-than-expected job growth in June, offsetting concerns from a trade war between the United States and China.

Nonfarm payrolls increased by 213,000 jobs last month, the Labor Department said, topping expectations of 195,000, while the unemployment rate rose from an 18-year low to 4.0 percent and average hourly earnings rose 0.2 percent.

The moderate wage growth could allay fears of a strong build-up in inflation pressures, keeping the Federal Reserve on a path of gradual interest rate increases.

“It was what the market wanted to see: more jobs created than expected, wage growth moderate and creating jobs where you want to see them … It’s not just creating jobs it’s creating careers,” said J.J. Kinahan, chief market strategist at TD Ameritrade in Chicago.

The strong jobs data follows the minutes of the Federal Reserve’s latest policy meeting which showed policymakers discussed if recession lurked around the corner and expressed concerns trade tensions could hit an economy that by most measures looked strong.

Earlier stock futures were set for a more cautious start after the United States and China imposed tariffs on each other’s goods worth $34 billion, with Beijing accusing Washington of starting the “largest-scale trade war.”

President Donald Trump warned the United States may ultimately target over $500 billion worth of Chinese goods, but global markets remained broadly sanguine, though concerns about the conflict escalating capped appetite for risk.

“The expectation of things is always worse for the market than the reality,” said Kinahan. “We certainly have to pay attention to trade but it’s been expected for a long time.”

At 9:54 a.m. EDT the Dow Jones Industrial Average was down 19.67 points, or 0.08 percent, at 24,337.07, the S&P 500 was up 4.26 points, or 0.16 percent, at 2,740.87 and the Nasdaq Composite was up 34.68 points, or 0.46 percent, at 7,621.10.

Eight of the 11 major S&P sectors were higher, led by a 0.8 percent jump in the S&P healthcare index.

Biogen jumped 17.8 percent after the company and Japanese drugmaker Eisai Co said the final analysis of a mid-stage trial of their Alzheimer’s drug showed positive results.

Among the decliners were industrials, energy and materials indexes.

Boeing, the single largest U.S. exporter to China, slipped 0.7 percent and Caterpillar dropped 1.3 percent.

The Philadelphia Semiconductor index, which is made up of chipmakers most of whom rely on China for a substantial chunk of revenue, dropped 0.4 percent.

Advancing issues outnumbered decliners by a 1.65-to-1 ratio on the NYSE and by a 2.07-to-1 ratio on the Nasdaq.

The S&

P index recorded 10 new 52-week highs and two new lows, while the Nasdaq recorded 67 new highs and nine new lows.

(Reporting by Sruthi Shankar and Savio D’Souza in Bengaluru; Editing by Arun Koyyur)

U.S. job growth picks up; unemployment rate drops to 3.9 percent

A help wanted sign is posted at a taco stand in Solana Beach, California, U.S., July 17, 2017. REUTERS/Mike Blake

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth increased less than expected in April and the unemployment rate dropped to near a 17-1/2-year low of 3.9 percent as some out-of-work Americans left the labor force.

The Labor Department’s closely watched employment report on Friday also showed wages barely rose last month, which may ease concerns that inflation pressures are rapidly building up, likely keeping the Federal Reserve on a gradual path of monetary policy tightening.

“Fed officials can rest easy that there is not any wage-based inflation on the horizon,” said Chris Rupkey, chief economist at MUFG in New York. “There is no need to speed up the path of interest rates because inflation isn’t heating up in a worrisome manner.”

Nonfarm payrolls increased by 164,000 jobs last month, the Labor Department reported. Data for March was revised up to show the economy adding 135,000 jobs instead of the previously reported 103,000. That was the fewest amount of jobs created in six months and followed an outsized gain of 324,000 in February.

While cold weather in March and April probably held back job growth, hiring is moderating as the labor market hits full employment. Employers, especially in the construction and manufacturing sectors, are increasingly reporting difficulties finding qualified workers.

The drop of two-tenths of a percentage point in the unemployment rate from 4.1 percent in March pushed it to a level last seen in December 2000 and within striking distance of the Fed’s forecast of 3.8 percent by the end of this year. It was the first time in six months that the jobless rate dropped.

But 236,000 people left the labor force in April, adding to the 158,000 who quit in March. The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell to 62.8 percent last month from 62.9 percent in March. It was the second straight monthly drop in the participation rate.

Economists polled by Reuters had forecast payrolls to rise by 192,000 jobs in April and the unemployment rate to fall to 4.0 percent. Average hourly earnings rose 0.1 percent last month after a 0.2 percent gain in March. That left the annual increase in average hourly earnings at 2.6 percent.

The dollar shrugged off the employment data, rising to its highest level this year against a basket of currencies. Prices of U.S. Treasuries fell and U.S. stocks rose.

Sluggish wage growth and a slowdown in hiring threaten to undercut the Trump administration’s argument that its $1.5 trillion income tax cut package, which came into effect in January and is highlighted by a sharp drop in the corporate income tax rate, would boost wages and hiring.

Companies like Apple have used their tax windfall for share buybacks and dividends.

President Donald Trump cheered the drop in the unemployment rate on Friday.

“I thought the jobs report was very good. The big thing to me was cracking 4,” Trump told reporters. “That hasn’t been done in a long time … we’re at full employment. We’re doing great.”

Democrats, however, reiterated their criticism of the tax cuts, saying more than $390 billion in share buybacks had been announced since the passage of the tax bill.

“President Trump promised American families that they would see a $4,000 annual raise after the tax plan, so far, average weekly wages have increased $11.69,” Democratic Senator Martin Heinrich said.

‘SUSTAINABLE PACE’

But average hourly earnings could be understating wage inflation. The Employment Cost Index, widely viewed by policymakers and economists as one of the better measures of labor market slack, showed wages rising at their fastest pace in 11 years during the period.

Inflation is flirting with the Fed’s 2 percent target.

The Fed’s preferred inflation measure, the personal consumption expenditures price index excluding food and energy, was up 1.9 percent year-on-year in March after a 1.6 percent rise in February.

The U.S. central bank on Wednesday left interest rates unchanged and said it expected annual inflation to run close to its “symmetric” 2 percent target over the medium term.

Economists interpreted symmetric to mean policymakers would not be too concerned with inflation overshooting the target. The Fed hiked rates in March and has forecast at least two more increases for this year.

Economists expect the unemployment rate will drop to 3.5 percent by the end of the year. Monthly job gains have averaged about 200,000 this year, more than the roughly 120,000 needed to keep up with growth in the working-age population. Though the decline in the labor force accounted for the drop in the unemployment rate last month, labor market slack is diminishing.

A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, dropped to 7.8 percent last month, the lowest level since July 2001, from 8.0 percent in March.

Construction payrolls rebounded by 17,000 jobs last month after recording their first drop in eight months in March. Manufacturing employment increased by 24,000 jobs in April after a gain of 22,000 positions in March.

Payrolls for temporary help, seen as a harbinger of future permanent hiring, rose by 10,300 after falling by 2,100 in March. There was a modest gain in leisure and hospitality employment while wholesale traders laid off workers.

Government payrolls fell 4,000 in April amid a decline in education employment at state governments.

“The moderation in job gains over the past two months may mark the beginning of the slow deceleration to a sustainable pace of job gains, which we estimate to be around or a little below 100,000 per month,” said Michael Feroli, an economist at JPMorgan in New York.

(Reporting by Lucia Mutikani; Additional reporting by Roberta Rampton; Editing by Paul Simao)

U.S. hiring accelerates; annual wage growth strongest since 2009

Job seekers line up to apply during "Amazon Jobs Day," a job fair being held at 10 fulfillment centers across the United States aimed at filling more than 50,000 jobs, at the Amazon.com Fulfillment Center in Fall River, Massachusetts, U.S., August 2, 2017.

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth surged in January and wages increased further, recording their largest annual gain in more than 8-1/2 years, bolstering expectations that inflation will push higher this year as the labor market hits full employment.

Nonfarm payrolls jumped by 200,000 jobs last month after rising 160,000 in December, the Labor Department said on Friday.

The unemployment rate was unchanged at a 17-year low of 4.1 percent. Average hourly earnings rose 0.3 percent in January to $26.74, building on December’s solid 0.4 percent gain.

That boosted the year-on-year increase in average hourly earnings to 2.9 percent, the largest rise since June 2009, from 2.7 percent in December. Workers, however, put in fewer hours last month. The average workweek fell to 34.3 hours, the shortest in four months, from 34.5 hours in December.

The robust employment report underscored the strong momentum in the economy, raising the possibility that the Federal Reserve could be a bit more aggressive in raising interest rates this year. The U.S. central bank has forecast three rate increases this year after raising borrowing costs three times in 2017.

“It definitely makes it a bit more likely that the Fed will have to do more than the three hikes that they’re currently planning for this year,” said Luke Bartholomew, investment strategist at Aberdeen Standard Investments.

Fed officials on Wednesday expressed optimism that inflation will rise toward its target this year. Policymakers, who voted to keep interest rates unchanged, described the labor market as having “continued to strengthen,” and economic activity as “rising at a solid rate.”

U.S. financial markets expect a rate hike in March. The dollar rose against a basket of currencies on the data. Prices for U.S. Treasuries fell, with the yield on the benchmark 10-year note rising to a four-year high. U.S. stock index futures slightly extended losses.

Economists say job gains are being driven by buoyant domestic and global demand.

Given that the labor market is almost at full employment, economists saw little boost to job growth from the Trump administration’s $1.5 billion tax cut package passed by the Republican-controlled U.S. Congress in December, in the biggest overhaul of the tax code in 30 years.

President Donald Trump and his fellow Republicans have cast the fiscal stimulus, which includes a reduction in the corporate income tax rate to 21 percent from 35 percent, as creating jobs and boosting economic growth.

According to outplacement consultancy firm Challenger, Gray & Christmas, only seven companies, including Apple, had announced plans to add roughly a combined 37,000 new jobs in response to the tax cuts as of the end of January.

Economists polled by Reuters had forecast nonfarm payrolls rising by 180,000 jobs last month and the unemployment rate unchanged at 4.1 percent. January’s jobs gains were above the monthly average of 192,000 over the past three months.

The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population.

JOB GAINS SEEN SLOWING

Job growth is expected to slow this year as the labor market hits full employment. Companies are increasingly reporting difficulties finding qualified workers, which economists say will force some to significantly raise wages as they compete for scarce labor.

Wage growth last month was likely supported by increases in the minimum wage which came into effect in 18 states in January. They probably also got a lift from the tax cut. Companies like Starbucks Corp and FedEx Corp have said they will use some of the savings from lower taxes to boost wages for workers.

Further gains are expected in February when Walmart raises entry-level wages for hourly employees at its U.S. stores. Annual wage growth is now close to the 3 percent that economists say is needed to push inflation towards the Fed’s 2 percent target.

The January household survey data incorporated new population controls. The department also released annual revisions to the payrolls data from the survey of employers and introduced new factors to adjust for seasonal fluctuations.

It said the level of employment in March of last year was 146,000 higher than it had reported, on a seasonally adjusted basis. The unemployment rate dropped seven-tenths of a percentage point in 2017 and economists expect it to hit 3.5 percent by the end of the year.

Employment gains were widespread in January. Manufacturing payrolls increased by 15,000 last month after rising 21,000 in December. The sector is being supported by strong domestic and international demand. A weak dollar is also providing a boost to manufacturing by making U.S.-made goods more competitive on the international market.

Hiring at construction sites picked up last month despite unseasonably cold weather. Construction payrolls increased by 36,000 jobs after rising 33,000 in December. Retail employment rebounded by 15,400 jobs in January after slumping 25,600 the prior month.

Government employment increased by 4,000 jobs following two straight months of declines. There were also increases in payrolls for professional and business services, leisure and hospitality as well as healthcare and social assistance.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

U.S. job growth cools as labor market nears full employment; wages rise

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth slowed more than expected in December amid a decline in retail employment, but a pick-up in monthly wage gains pointed to labor market strength that could pave the way for the Federal Reserve to increase interest rates in March.

Nonfarm payrolls increased by 148,000 jobs last month after surging by 252,000 in November, the Labor Department said on Friday. Retail payrolls decreased by 20,300 in December, the largest drop since March, despite reports of a strong holiday shopping season.

The unemployment rate was unchanged at a 17-year low of 4.1 percent. Economists polled by Reuters had forecast payrolls rising by 190,000 in December. The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population.

“We do not think that today’s employment report will keep the Federal Reserve from tightening again at the March policy meeting, given other strong recent economic data,” said David Berson, chief economist at Nationwide in Columbus, Ohio.

Job growth surged in October and November after being held back in September by back-to-back hurricanes, which destroyed infrastructure and homes and temporarily dislocated some workers in Texas and Florida.

Taking some sting out of the moderation in job gains, average hourly earnings rose 9 cents, or 0.3 percent, in December after a 0.1 percent gain in the prior month. That lifted the annual increase in wages to 2.5 percent from 2.4 percent in November.

Prices of U.S. Treasuries were mostly flat while the U.S. dollar <.DXY> was slightly stronger against a basket of currencies. U.S. stock indexes opened at fresh record highs.

Employment gains in December were below the monthly average of 204,000 over the past three months. Job growth is slowing as the labor market nears full employment, but could get a temporary boost from a $1.5 trillion package of tax cuts passed by the Republican-controlled U.S. Congress and signed into law by President Donald Trump last month.

The lift from the fiscal stimulus, which includes a sharp reduction in the corporate income tax rate to 21 percent from 35 percent, is likely to be modest as the stimulus is occurring with the economy operating almost at capacity. There are also concerns the economy could overheat.

“With the tax cuts we get solid GDP growth in the near-term and then a fiscal hangover, which will likely put the economy at a greater risk of recession,” said Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pennsylvania.

NEAR FULL EMPLOYMENT

Data ranging from housing to manufacturing and consumer spending have suggested solid economic growth in the fourth quarter, despite a widening of the trade deficit in both October and November, which could subtract from gross domestic product.

In a separate report on Friday, the Commerce Department said the trade gap widened 3.2 percent in November to $50.5 billion, the highest level since January 2012.

The deficit was boosted by record high imports, which offset the highest exports in three years. The economy grew at a 3.2 percent annualized rate in the third quarter.

For all of 2017, the economy created 2.1 million jobs, below the 2.2 million added in 2016. Economists expect job growth to slow further this year as the labor market hits full employment, which will likely boost wage growth as employers compete for workers.

Economists are optimistic that annual wage growth will top 3.0 percent by the end of this year. The December employment report incorporated annual revisions to the seasonally adjusted household survey data going back five years.

There was no change in the unemployment rate, which declined by seven-tenths of a percentage point last year.

Economists believe the jobless rate could drop to 3.5 percent by the end of this year. That could potentially unleash a faster pace of wage growth and translate into a much stronger increase in inflation than currently anticipated.

That, according to economists, would force the Fed to push through four interest rate increases this year instead of the three it has penciled in. The U.S. central bank raised borrowing costs three times in 2017.

“If the unemployment rate declines and wages rise faster, which is likely, the Fed is going to start worrying about wage inflation,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

Employment gains were largely broad-based in December. Construction payrolls increased by 30,000 jobs, the most since February, reflecting recent strong increases in homebuilding. Manufacturing employment increased by 25,000 jobs.

Manufacturing is being supported by a strengthening global economy and a weakening dollar. Employment in the utilities sector fell for a second straight month.

General merchandise stores payrolls tumbled by 27,300 in December, with employment at clothing stores dropping by 3,800 jobs.

For all of 2017, retail employment dropped by 67,000 jobs after rising by 203,000 in 2016. Further job losses are likely this year as major retailers, facing stiff competition from online sellers like Amazon.com Inc <AMZN.O>, close stores.

Sears Holdings Corp said on Thursday it was shuttering 103 unprofitable Kmart and Sears stores. Macys Inc also announced 11 store closures, which could leave 5,000 workers unemployed.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. job growth speeds up, unemployment rate falls

FILE PHOTO: Job seekers listen to a recruiter at the Colorado Hospital Association job fair in Denver, Colorado, U.S. on October 4, 2017

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth accelerated in October after hurricane-related disruptions in the prior month, but a sharp retreat in annual wage gains and surge in the number of people dropping out of the work force cast a cloud over the labor market.

Nonfarm payrolls increased by 261,000 jobs last month as 106,000 leisure and hospitality workers returned to work, the Labor Department said in its closely watched employment report on Friday. That was the largest gain since July 2016 but below economists’ expectations for an increase of 310,000 jobs.

Data for September was revised to show a gain of 18,000 jobs instead of a decline of 33,000 as previously reported. Some aspects of the report, however, were downbeat.

Average hourly earnings slipped by one cent, leaving them unchanged in percentage terms, in part because of the return of the lower-paid industry workers. That lowered the year-on-year increase to 2.4 percent, which was the smallest since February 2016. Wages shot up 0.5 percent in September, lifting the annual increase in that month to 2.9 percent.

Still, October’s job growth acceleration reinforced the Federal Reserve’s assessment on Wednesday that “the labor market has continued to strengthen,” and probably does little to change expectations it will raise interest rates in December. The U.S. central bank has lifted rates twice this year.

“The weakness in wages will not go unnoticed at the Fed, particularly for members that remained more concerned over the inflation outlook,” said Michael Hanson, chief U.S. economist at TD Securities in New York. “Overall, sustained job growth and labor market slack at pre-crisis lows keeps December in play.”

Although the unemployment rate fell to near a 17-year low of 4.1 percent, it was because the labor force dropped by 765,000 after a surprise jump of 575,000 in September.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell four-tenths of a percentage point to 62.7 percent.

Prices of U.S. Treasuries rose after the data. The dollar <.DXY> gained against a basket of currencies and stocks on Wall Street were largely flat.

LABOR MARKET TIGHTENING

The sharp moderation in job growth in September was blamed on hurricanes Harvey and Irma, which devastated parts of Texas and Florida in late August and early September and left workers, mostly in lower-paying industries such as leisure and hospitality, temporarily unemployed.

Economists, however, remain optimistic that wage growth will accelerate with the labor market near full employment. Last month’s one-tenth percentage point drop in the unemployment rate took it to its lowest reading since December 2000. The jobless rate is now below the Fed’s median forecast for 2017.

A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, dropped to 7.9 percent last month, the lowest level since December 2006, from 8.3 percent in September.

Tepid wage growth supports the view that inflation will continue to undershoot the Fed’s 2 percent target and could raise concerns about consumer spending, which appears to have been largely supported by savings this year.

The economy grew at a 3.0 percent annualized rate in the third quarter. Growth has remained strong even as President Donald Trump and the Republican-led Congress have struggled to enact their economic program.

Republicans in the U.S. House of Representatives on Thursday unveiled a bill that proposed slashing the corporate tax rate to 20 percent from 35 percent, cutting tax rates on individuals and families and ending certain tax breaks. The plan has been met with opposition from small businesses, realtors and homebuilders.

A separate report from the Commerce Department on Friday showed the U.S. trade deficit increased 1.7 percent to $43.5 billion in September as rising exports were offset by a surge in imports. Exports, which were the highest since December 2014, are being buoyed by a weakening dollar and strong global growth.

Monthly job growth has averaged 162,000 over the past three months. The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population.

The slowing job growth trend largely reflects employers’ difficulties in finding qualified workers. Some economists believe the impact of the hurricanes was still holding back employment growth.

Private payrolls surged by 219,000 jobs in October after falling by 3,000 in September. Manufacturing employment increased by 24,000 jobs. The retail sector lost 8,300 jobs last month.

Construction payrolls gained 11,000 in October, likely boosted by hiring related to the clean-up and rebuilding efforts in the wake of the hurricanes. There were increases in professional and business services payrolls. Healthcare employment also rose last month.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. job growth rebounds sharply, unemployment rate hits 4.4 percent

A job seeker fills out an application at the King Soopers grocery store table at a job fair at the Denver Workforce Center in Denver, Colorado, U.S. February 15, 2017. REUTERS/Rick Wilking

By Lucia Mutikani

WASHINGTON – U.S. job growth rebounded sharply in April and the unemployment rate dropped to a near 17-year low of 4.4 percent, signs of a tightening labor market that could seal the case for an interest rate increase next month despite moderate wage growth.

Nonfarm payrolls jumped by 211,000 jobs last month, the Labor Department said on Friday, well above the monthly average of 185,000 for this year and a jump from the gain of 79,000 in March.

Job gains were driven by a surge in hiring in the leisure and hospitality sector as well as business and professional services.

The drop of one-tenth of a percentage point in the unemployment rate took it to its lowest level since May 2007.

The decline reflected both an increase in hiring and people leaving the labor force.

The labor force participation rate, or the share of

working-age Americans who are employed or at least looking for a job, fell to 62.9 percent from an 11-month high of 63 percent.

The rebound in hiring supports the Federal Reserve’s contention that the pedestrian 0.7 percent annualized economic growth pace in the first quarter was likely “transitory,” and its optimism that economic activity would expand at a “moderate”

pace.

The Fed on Wednesday kept its benchmark overnight interest rate unchanged and said it expected labor market conditions would “strengthen somewhat further.”

The U.S. central bank raised its overnight interest rate by a quarter of a percentage point in March and has forecast two more increases this year.

Average hourly earnings rose seven cents, or 0.3 percent, last month, partly because of a calendar quirk. While that lowered the year-on-year increase to 2.5 percent, the lowest since August 2016, there are signs that wage growth is accelerating as labor market slack diminishes.

A government report last week showed private sector wages recorded their biggest gain in 10 years in the first quarter.

NEAR FULL EMPLOYMENT

The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population. Job growth averaged 178,000 per month in the first quarter.

With the labor market expected to hit a level consistent with full employment this year, payroll gains could slow amid growing anecdotal evidence that firms are struggling to find qualified workers.

Construction payrolls rose 5,000 last month and manufacturing employment advanced by 6,000 jobs. Leisure and hospitality payrolls jumped by 55,000 in April. Professional and business services payrolls rose by 39,000.

Retail payrolls gained 6,300 after two straight months of declines. Retailers including J.C. Penney Co Inc <JCP.N>, Macy’s Inc <M.N> and Abercrombie & Fitch <ANF.N> have announced thousands of layoffs as they shift toward online sales and scale back on brick-and-mortar operations.

Government payrolls jumped 17,000 last month.

Other labor market measures also showed strength last month.

A broad measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, dropped to 8.6 percent from 8.9 percent in March.

The employment-to-population ratio rose one-tenth of percentage point to a fresh eight-year high of 60.2 percent.

((Reporting by Lucia Mutikani; Editing by Paul Simao))

U.S. jobless claims drop to near 43-year low

WASHINGTON, Feb 9 (Reuters) – The number of Americans filing for unemployment benefits unexpectedly fell last week to near a 43-year low, amid a further tightening of the labor market that could eventually spur faster wage growth.

Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 234,000 for the week ended Feb. 4, the Labor Department said on Thursday. That left claims just shy of the 43-year low of 233,000 touched in early November.

Claims have now remained below 300,000, a threshold associated with a strong labor market, for 101 straight weeks.

That is the longest stretch since 1970, when the labor market was much smaller.

The labor market is at or close to full employment, with the unemployment rate at 4.8 percent. It hit a nine-year low of 4.6 percent in November.

Further tightening in labor market conditions could boost wage growth, which has remained stubbornly sluggish despite anecdotal evidence of more companies struggling to find qualified workers.

Lackluster wage growth, if sustained, could hurt consumer spending and crimp economic growth. Economists polled by Reuters had forecast first-time applications for jobless benefits rising to 250,000 in the latest week.

A Labor Department analyst said there were no special factors influencing last week’s data and no states had been estimated.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 3,750 to 244,250 last week, the lowest level since November 1973.

The claims report also showed the number of people still receiving benefits after an initial week of aid increased 15,000 to 2.08 million in the week ended Jan. 28. The four-week average of the so-called continuing claims fell 3,750 to 2.08 million.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

((Lucia.Mutikani@thomsonreuters.com; 1 202 898 8315; Reuters

Messaging: lucia.mutikani.thomsonreuters.com@reuters.net))

U.S. job growth beats expectations in January, wages soft

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth surged more than expected in January as construction firms and retailers ramped up hiring, which likely gives the Trump administration a head start as it seeks to boost the economy and employment.

Nonfarm payrolls increased by 227,000 jobs last month, the largest gain in four months, the Labor Department said on Friday. But the unemployment rate rose one-tenth of a percentage point to 4.8 percent and wages increased modestly, suggesting that there was still some slack in the labor market.

Revisions to November and December showed the economy created 39,000 fewer jobs than previously reported. Still, the labor market continues to tighten, which could soon spur a faster pace of wage growth. Federal Reserve officials view the labor market as being at or near full employment.

Economists polled by Reuters had forecast payrolls rising 175,000 last month and the unemployment rate unchanged at 4.7 percent.

President Donald Trump vowed during last year’s election campaign to deliver 4 percent annual gross domestic product growth, largely on the back of a plan to cut taxes, reduce regulations, increase infrastructure spending and renegotiate trade deals in the United States’ favor.

Although details on the policy proposals remain sketchy, consumer and business confidence have surged in the wake of Trump’s election victory last November. But with the economy near full employment, some economists are skeptical of the 4 percent growth pledge. Annual GDP growth has not exceeded 2.6 percent since the 2007-08 recession.

DISAPPOINTING WAGE GROWTH

Average hourly earnings increased only three cents or 0.1 percent last month. December’s wage gain was revised down to 0.2 percent from the previously reported 0.4 percent increase.

January’s small rise in average hourly earnings is a surprise given that the minimum wage took effect in more than a dozen states last month. The small gain lowered the year-on-year increase in earnings to 2.5 percent from 2.8 percent in December.

Sluggish wage growth, if it persists, would suggest only a gradual pace of rate increases by the Fed. The U.S. central bank, which hiked rates in December, has forecast three rate increases this year.

On Wednesday, the Fed kept its benchmark overnight interest rate unchanged in a range of 0.50 percent to 0.75 percent. It said it expected labor market conditions would strengthen “somewhat further.”

With its January employment report, the government published its annual “benchmark” revisions and updated the formulas it uses to smooth the data for regular seasonal fluctuations. It also incorporated new population estimates.

The government said the level of employment in March of last year was 60,000 lower than it had reported. As the labor market nears full employment, the pool of workers is shrinking, which is slowing job growth.

The shift in population controls mean figures on the labor force or number of employed or unemployed in January are not directly comparable with December.

The labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job, was at 62.9 percent in January, the highest level since September.

All sectors of the economy added jobs in January.

Manufacturing payrolls increased by 5,000 jobs, rising for a second straight month as the oil-related drag on the sector eases. Construction employment jumped 36,000, the largest increase since March, likely boosted by warm weather, after December’s paltry 2,000 gain.

Retail payrolls, surprisingly surged 45,900, the biggest rise since February. Retailers, including Macy’s <M.N>, Sears <SHLD.O>, American Apparel and Abercrombie & Fitch <ANF.N> announced job cuts in January amid store closures. Department store sales are being undercut by online retailers, led by Amazon.com <AMZN.O>.

Government employment fell for a fourth straight month in January. Further declines are likely after the Trump administration enforced a hiring freeze on civilian federal government workers on Jan. 22.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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