Tag Archives: Labor Department

U.S. weekly unemployment claims lowest since 1969

FILE PHOTO: A "Help Wanted" sign sits in the window of a shop in Harvard Square in Cambridge, Massachusetts, U.S., February 11, 2019. REUTERS/Brian Snyder/File Photo

WASHINGTON, (Reuters) – The number of Americans filing applications for unemployment benefits dropped to a 49-1/2-year low last week, pointing to sustained labor market strength that could temper expectations of a sharp slowdown in economic growth.

Initial claims for state unemployment benefits fell 8,000 to a seasonally adjusted 196,000 for the week ended April 6, the lowest level since early October 1969. Claims have now declined for four straight weeks. Data for the prior week was revised to show 2,000 more applications received than previously reported.

Economists polled by Reuters had forecast claims would rise to 211,000 in the latest week. The Labor Department said no states were estimated last week.

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 7,000 to 207,000 last week, the lowest level since early December 1969.

The labor market is the main pillar of support for the economy, which appears to have lost momentum in the first quarter as the stimulus from a $1.5 trillion tax cut package fades and a trade war between China and the United States and softening global demand hurt exports.

Nonfarm payrolls increased by 196,000 jobs in March, well above the roughly 100,000 needed per month to keep up with growth in the working-age population. The unemployment rate is at 3.8 percent, close to the 3.7 percent Federal Reserve officials project it will be by the end of the year.

Thursday’s claims report showed the number of people receiving benefits after an initial week of aid decreased 13,000 to 1.71 million for the week ended March 30. The four-week moving average of the so-called continuing claims dropped 11,000 to 1.73 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)

Americans filing applications for unemployment benefits fall to lowest level since 1969

FILE PHOTO - People attend 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/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing applications for unemployment benefits fell to a more than 49-year low last week, pointing to sustained labor market strength despite slowing economic growth.

Other data on Thursday showed U.S.-based companies announced fewer layoffs in March, but job cuts for the first quarter were the highest since 2015. The economy is losing momentum as the stimulus from a $1.5 trillion tax cut package fades

Initial claims for state unemployment benefits declined 10,000 to a seasonally adjusted 202,000 for the week ended March 30, the lowest level since early December 1969, the Labor Department said. Data for the prior week was revised to show 1,000 more applications received than previously reported.

Economists polled by Reuters had forecast claims rising to 216,000 in the latest week. The Labor Department said only claims for California were estimated.

The claims data has shown no significant pickup in layoffs and there have been reports of companies reluctant to let go of workers amid a growing shortage of skilled labor. The scarcity of workers contributed to a recent slowdown in hiring.

Job growth has slowed from last year’s roughly 225,000 monthly average pace. The pace of increase, however, remains more than sufficient to keep up with growth in the working age population, holding down the unemployment rate.

U.S. Treasuries prices pared gains after the data, while the dollar was little changed against a basket of currencies.

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 4,000 to 213,500 last week, the lowest level since early October 2018.

The claims data has no bearing on March’s employment report, which is scheduled for release on Friday. According to a Reuters survey of economists, nonfarm payrolls likely increased by 180,000 jobs last month after a meager 20,000 in February, which was seen as pay-back after robust gains in the prior two months.

The unemployment rate is forecast unchanged at 3.8 percent.

A separate report on Thursday from global outplacement consultancy Challenger, Gray & Christmas showed planned job cuts by U.S.-based employers dropped 21 percent to 60,587 in March.

However, layoffs in the first quarter jumped 10.3 percent to 190,410 from the last three months of 2018. That was the highest since the third quarter of 2015 and was partly blamed on “economic uncertainty and fears of an upcoming downturn.”

Retailers continued to lead job cuts, purging 46,061 positions in the first quarter. The automotive sector eliminated 8,838 jobs in March, leading to 15,887 layoffs by auto manufacturers and suppliers in the first quarter. Redundancies were also high in the energy and financial sectors.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

U.S. productivity rises more than expected in fourth quarter

FILE PHOTO: A worker cuts a steel coil at the Novolipetsk Steel PAO steel mill in Farrell, Pennsylvania, U.S., March 9, 2018. REUTERS/Aaron Josefczyk

WASHINGTON, March 7 – U.S. worker productivity rose more than expected in the fourth quarter, leading to the biggest annual increase in eight years.

The Labor Department said on Thursday non farm productivity, which measures hourly output per worker, increased at a 1.9 percent annualized rate in the last quarter.

Data for the third quarter was revised down to show productivity rising at a pace of 1.8 percent instead of the previously reported 2.2 percent rate.

Economists polled by Reuters had forecast fourth-quarter productivity advancing at a 1.6 percent rate following a moderation in gross domestic product growth for that period. The economy grew at a 2.6 percent rate in the October-December period after a robust 3.4 percent growth pace in the third quarter.

The release of the full fourth-quarter productivity report was delayed by a 35-day partial shutdown of the U.S. government that ended on Jan. 25. The lapse in funding affected the collection and processing of economic data by the Commerce Department.

Compared to the fourth quarter of 2017, productivity increased at a rate of 1.8 percent. Productivity grew 1.3 percent in 2018, the strongest since 2010, after rising 1.1 percent in 2017.

Sluggish productivity is one of the constraints to keeping the economy on a path of strong growth on a sustained basis.

Unit labor costs, the price of labor per single unit of output, rose at a 2.0 percent pace in the fourth quarter.

Unit labor costs in the July-September period grew at a 1.6 percent rate. Labor costs increased at a 1.0 percent rate compared to the fourth quarter of 2017.

They increased 1.4 percent in 2018, the smallest gain since 2016, after rising 2.2 percent in 2017.

Despite moderate gains in labor costs, compensation is rising. Hourly compensation increased at a 3.9 percent rate in the fourth quarter after advancing at a 3.5 percent pace in the July-September period. Hourly compensation increased at a 2.8 percent rate compared to the fourth quarter of 2017. It increased 2.7 percent in 2018.

(Reporting by Lucia Mutikani Editing by Paul Simao)

U.S. job openings hit record high; workers more scarce

Corporate recruiters (R) gesture and shake hands as they talk with job seekers at a Hire Our Heroes job fair targeting unemployed military veterans and sponsored by the Cable Show, a cable television industry trade show in Washington, June 11, 2013. REUTERS/Jonathan Ernst/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job openings surged to a record high in December, led by vacancies in the construction and accommodation and food services sectors, strengthening analysts’ views that the economy was running out of workers.

While the release of the Labor Department’s monthly Job Openings and Labor Turnover Survey, or JOLTS, on Tuesday underscored labor market strength, there are worries the shortage of workers could hurt an economic expansion that has lasted 9-1/2 years and is the second longest on record.

“The labor market continues to heat up,” said Chris Rupkey, chief economist at MUFG in New York. “But growth cannot continue for much longer if there is no one out there to work in the factories and shops and malls across America.”

Job openings, a measure of labor demand, increased by 169,000 to a seasonally adjusted 7.3 million in December, the highest reading since the series started in 2000. That lifted the job openings rate to 4.7 percent from 4.6 percent in November.

Construction vacancies increased by 88,000 jobs in December. There were an additional 84,000 jobs in the accommodation and food services sector. Job openings in the healthcare and social assistance sector rose by 79,000 in December.

Federal government vacancies, however, fell by 32,000 jobs and job openings in real estate, rental and leasing dropped 31,000 in December.

Hiring continued to lag job openings in December, rising to 5.9 million from 5.8 million in November. That further widened the gap between vacancies and hiring, which emerged in 2015, reflecting tightening labor market conditions. There were 1.2 job openings for every unemployed person in December.

ROBUST LABOR MARKET

Anecdotal evidence has been growing of companies experiencing difficulties finding workers. A survey of small businesses published on Tuesday found that almost a quarter of owners reported that difficulties finding qualified workers as their “single most important business problem” in January.

According to the survey from the National Federation of Independent Business, 35 percent of small business owners reported job openings they could not fill in January.

The labor market has enjoyed a record 100 straight months of job gains, with nonfarm payrolls increasing by 304,000 jobs in January, the most since February 2018. But as workers become more scarce, job growth is expected to slow to around 150,000 per month this year.

Economists believe the dearth of workers will drive up wage growth, even though the number of workers voluntarily quitting their jobs has remained steady.

“The diminishing availability of workers is expected to lead to more upward pressure on wages, bring more workers into the labor force and induce more companies to find ways to produce and service their customers with automated processes,” said Sophia Koropeckyj, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

The JOLTS report showed the number of workers voluntarily quitting their jobs was little changed at 3.5 million in December, keeping the quits rate at 2.3 percent for a third straight month. The quits rate is viewed by policymakers and economists as a measure of job market confidence.

There were increases in the number of workers quitting their jobs in professional and business services and in the health care and social assistance sectors. But these were offset by declines in several industries and the government.

“With a labor market this tight, you may expect the quits rate to be going up or at a higher level already,” said Nick Bunker, an economist at Indeed Hiring Lab. “The big question is whether this a temporary lull, or if the quits rate has hit its high point.”

Layoffs fell in December, pushing the layoffs rate down to 1.1 percent from 1.2 percent in November.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. weekly jobless claims retreat from one-and-a-half-year high

Job seekers and recruiters gather at TechFair in Los Angeles, California, U.S. March 8, 2018. REUTERS/Monica Almeida

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing applications for unemployment benefits dropped from near a 1-1/2-year high last week, but the decline was less than expected, suggesting some moderation in the pace of job growth.

Still, the Labor Department’s report on Thursday continued to point to strong job market conditions, which should underpin the economy amid rising headwinds, including a fading fiscal stimulus boost and a trade war between Washington and Beijing, as well as slowing growth in China and Europe.

The Federal Reserve last week kept interest rates steady but said it would be patient in lifting borrowing costs further this year in a nod to growing uncertainty over the economy’s outlook. The U.S. central bank removed language from its December policy statement that risks to the outlook were “roughly balanced.”

“Labor market conditions remain quite positive, good news for workers, for the consumer sector and the economy more broadly,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan.

Initial claims for state unemployment benefits tumbled 19,000 to a seasonally adjusted 234,000 for the week ended Feb. 2, the Labor Department said on Thursday. The drop partially unwound the prior week’s jump, which lifted claims to 253,000, the highest reading since September 2017.

Claims that week were boosted by layoffs in the service industry in California, most likely striking teachers in Los Angeles.

A 35-day partial shutdown of the federal government as well as difficulties adjusting the data around moving holidays like Martin Luther King Jr. day, which occurred later this year than in recent years, also probably contributed to the spike in filings.

The longest shutdown in history likely forced workers employed by government contractors to file claims for unemployment benefits.

The shutdown ended on Jan. 25 after President Donald Trump and Congress agreed to temporary government funding, without money for his U.S.-Mexico border wall.

Economists polled by Reuters had forecast claims falling to 221,000 in the latest week.

U.S. stocks were trading lower on renewed fears of a global slowdown after the European Union cut its economic growth forecasts and White House adviser Larry Kudlow warned there was still a sizable distance to go on U.S.-China trade talks. The dollar was little changed against a basket of currencies, while U.S. Treasury prices rose.

MOMENTUM SLOWING

The Labor Department said no states were estimated last week. The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 4,500 to 224,750 last week. Claims by federal government workers, which are filed separately and with a one-week lag fell 8,070 to 6,669 in the week ended Jan. 26.

“Claims remain important to watch in the weeks ahead,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics in White Plains, New York. “The data are suggesting at least some slowing in employment growth.”

The government reported last Friday that non-farm payrolls increased by 304,000 jobs in January, the largest gain since February 2018. Thursday’s claims report showed the number of people receiving benefits after an initial week of aid fell 42,000 to 1.74 million for the week ended Jan. 26.

These so-called continuing claims had raced to a nine-month high in the prior week. The four-week moving average of continuing claims rose 4,250 to 1.74 million.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

U.S. weekly jobless claims jump to near one-and-a-half year high

FILE PHOTO - A man holds a leaflet at a military veterans' job fair in Carson, California October 3, 2014. REUTERS/Lucy Nicholson

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing applications for unemployment benefits surged to near a 1-1/2-year high last week, but economists dismissed the jump as a fluke and said temporary factors, including a partial government shutdown, were to blame.

A strike by teachers in California, cold weather and difficulties adjusting the data around moving holidays like Martin Luther King Jr. Day also likely were factors in the spurt in claims reported by the Labor Department on Thursday.

“We are skeptical the rise could reflect a true weakening in the labor market given that there are few other signs of weaker labor markets in January,” said John Ryding, chief economist at RDQ Economic in New York. “Nonetheless, if we maintain this higher level of jobless claims in the coming weeks, that would indicate a pickup in layoff activity.”

Initial claims for state unemployment benefits jumped 53,000 to a seasonally adjusted 253,000 for the week ended Jan. 26, the highest level since September 2017, the Labor Department said. The rise was also the largest since September 2017.

Claims dropped to 200,000 in the prior week, which was the lowest level since October 1969. Economists polled by Reuters had forecast claims rising to only 215,000 in the latest week.

The claims data covered the Martin Luther King Jr. holiday, which occurred later this year than in the past. Economists believe non-federal government workers who were temporarily unemployed during the longest government shutdown in the country’s history likely helped to boost claims last week.

The surge in claims came amid a recent deterioration in business and consumer confidence, which was partly blamed on a five-week government shutdown that has since ended.

The Federal Reserve on Wednesday kept interest rates steady but said it would be patient in lifting borrowing costs further this year in a nod to growing uncertainty over the economy’s outlook. The U.S. central bank removed language from its December policy statement that risks to the outlook were “roughly balanced.”

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 5,000 to 220,250 last week.

The claims data has no bearing on January’s employment report, which is scheduled for release on Friday, as it falls outside the survey period. According to a Reuters survey of economists, non-farm payrolls likely increased by 165,000 jobs in January after jumping by 312,000 in December.

The 35-day government shutdown is not expected to have an impact on January’s job growth, as workers who were furloughed will be paid retroactively together with colleagues who worked without pay. However, those workers who stayed at home during the shutdown are expected to temporarily push up the unemployment rate in January.

The dollar fell against most major currencies, dropping to a two-week low versus the yen, pressured by the Fed’s cautious economic outlook. U.S. Treasury yields fell, while stocks on Wall Street were trading mostly higher.

STEADY WAGE GAINS

Underscoring the labor market’s strength, another report on Thursday from the Labor Department showed its Employment Cost Index, the broadest measure of labor costs, increased 0.7 percent in the fourth quarter after rising 0.8 percent in the July-September period.

The fourth quarter rise lifted the year-on-year rate of increase in labor costs to 2.9 percent, the biggest gain since June 2008, from 2.8 percent in the 12 months through September.

Wages and salaries, which account for 70 percent of employment costs, rose 0.6 percent in the fourth quarter after advancing 0.9 percent in the prior period. They were up 3.1 percent in the 12 months through December.

That was the biggest increase since June 2008 and followed a 2.9 percent gain in the year through September.

“It supports our view that the tightness in the labor market is generating upward pressure on compensation,” said Daniel Silver, an economist at JPMorgan in New York.

While the labor market is on solid footing, manufacturing appears to be slowing. A third report on Thursday showed the MNI Chicago business barometer dropped 7.1 points to a reading of 56.7 in January as new orders tumbled to a two-year low. The survey’s measure of production dropped to a 10-month low.

There was some good news on the housing market. The Commerce Department reported new home sales vaulted 16.9 percent in November to a seasonally adjusted annual rate of 657,000 units. The surge erased October’s 8.3 percent plunge in single-family home sales.

The November home sales report was delayed by the government shutdown, which affected the Commerce Department.

The housing market struggled in 2018, weighed down by acute shortages of homes for sales, which boosted prices, as well as higher mortgage rates. But there are glimmers of hope as house price inflation has slowed significantly and mortgage rates have eased after shooting up last year.

Supply, however, still remains tight.

“We expect a further rise in new home sales during 2019 as homebuyers look to new builds, with inventory conditions for existing homes still extremely tight,” said Ben Ayers, senior economist at Nationwide in Columbus, Ohio.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao)

U.S. weekly jobless claims point to strong labor market

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/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing applications for jobless benefits fell more than expected last week, pointing to sustained labor market strength that could further ease concerns about the economy’s health.

The report from the Labor Department on Thursday followed data last week showing employers hired the most workers in 10 months in December and increased wages for their workers.

Surveys showing steep declines in consumer and manufacturing activity in December had stoked fears that the economy was rapidly losing momentum.

“There are increasing risks and caution over the economic outlook in 2019, but jobless claims say the seas are calm and it looks to be smooth sailing for the economy for now,” said Chris Rupkey, chief economist at MUFG in New York.

Initial claims for state unemployment benefits fell 17,000 to a seasonally adjusted 216,000 for the week ended Jan. 5. Data for the prior week was revised up to show 2,000 more applications received than previously reported.

Economists polled by Reuters had forecast claims declining to 225,000 in the latest week. The Labor Department said only claims for Puerto Rico were estimated last week.

U.S. financial markets were little moved by the claims report.

Claims were boosted in the week ending Dec. 29 as workers furloughed because of a partial shutdown of the U.S. government applied for benefits. The federal government partially closed on Dec. 22 as President Donald Trump demanded that the U.S. Congress give him $5.7 billion this year to help build a wall on the U.S. border with Mexico.

The shutdown, which has affected a quarter of the government, including the Commerce Department, has left 800,000 employees furloughed or working without pay. Private contractors working for many government agencies are also without pay.

FEDERAL WORKER CLAIMS RISE

Claims by federal workers are reported separately and with a one-week lag. The number of federal employees filing for jobless benefits increased by 3,831 to 4,760 in the week ending Dec. 29. Furloughed federal government workers can submit claims for unemployment benefits, but payment would depend on whether Congress decides to pay their salaries retroactively.

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 2,500 to 221,750 last week.

The economy created 312,000 jobs in December. The unemployment rate rose two-tenths of a percentage point to 3.9 percent as some unemployed Americans piled into the labor market, confident of their job prospects.

While labor market strength has helped to calm fears that the economy, tighter financial market conditions and slowing global growth could make the Federal Reserve cautious about raising interest rates this year.

Minutes of the U.S. central bank’s Dec. 18-19 policy meeting published on Wednesday showed “many” officials were of the view that the Fed “could afford to be patient about further policy firming.”

The Fed has forecast two rate hikes this year. Fed Chairman Jerome Powell and several policymakers have said they would be patient and flexible in policy decisions this year.

Thursday’s claims report also showed the number of people receiving benefits after an initial week of aid fell 28,000 to 1.72 million for the week ended Dec. 29. The four-week moving average of the so-called continuing claims increased 15,250 to 1.72 million.

November’s wholesale inventories report from the Commerce Department’s Census Bureau, which was scheduled for release on Thursday, will not be published because of the government shutdown.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. private payrolls surge in December; weekly jobless claims rise

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. private payrolls increased by the most in nearly two years in December, suggesting sustained strength in the labor market despite ongoing financial market volatility.

While other data on Thursday showed the number of Americans filing applications for unemployment benefits increased more than expected last week, the underlying trend in claims remained low. Claims data tend to be volatile around year-end holidays.

Labor market data is being closely watched for signs of whether tightening financial conditions could be impacting on companies’ hiring decisions. A sharp stock market sell-off has stoked fears about the economy’s health.

The ADP National Employment Report showed private payrolls rose by 271,000 jobs last month after a downwardly revised 157,000 increase in November. Economists polled by Reuters had forecast private payrolls advancing 178,000 last month following a previously reported 179,000 increase in November.

The ADP report, which is jointly developed with Moody’s Analytics, was published ahead of the government’s more comprehensive employment report for December scheduled for release on Friday.

The ADP report has a spotty record predicting the private-payrolls component of the government’s employment report and last month’s jump probably exaggerates the strength of the labor market.

“The December ADP data have been especially unreliable because of the challenge of adjusting for ‘purging’ effects,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics in White Plains, New York.

“December is typically when employers drop from their listings all individuals who have left their firms permanently,” he said. “Such workers are dropped from the government data when they are no longer being paid, but some employers keep former employees on their lists for ADP until year-end tax documents have been filed.”

According to a Reuters survey of economists, nonfarm payrolls likely increased by 177,000 jobs last month after rising 155,000 in November. The unemployment rate is forecast steady near a 49-year low of 3.7 percent, not too far from the Federal Reserve’s forecast of 3.5 percent by the end of 2019.

With the labor market viewed at being at or beyond full employment, the pace of job growth is slowing as employers struggle to find workers. Some of the moderation in employment gains has been attributed to the stock market rout.

The Fed raised interest rates last month for the fourth time in 2018, but forecast fewer rate hikes this year and signaled its tightening cycle is nearing an end in the face of financial market volatility and slowing global growth.

U.S. financial markets were little moved by the data.

In a separate report on Thursday, the Labor Department said initial claims for state unemployment benefits rose 10,000 to a seasonally adjusted 231,000 for the week ended Dec. 29. Data for the prior week was revised higher to show 5,000 more applications received than previously reported.

Economists polled by Reuters had forecast claims increasing to 220,000 in the latest week.

The Labor Department said claims for California and Virginia were estimated last week. Unadjusted claims for both of those states declined last week.

A Labor Department official said there was no indication of an increase in filings last week from federal workers furloughed because of a partial shutdown of the government that is now in its second week.

Data on claims filed by federal employees is released with a one-week lag. The shutdown, which started on Dec. 22, was triggered by President Donald Trump’s demand for $5 billion in border wall funding.

Some 800,000 employees from the Departments of Homeland Security, Transportation, Commerce and others have been furloughed or are working without pay.

Claims data tends to be noisy around year-end holidays. The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, slipped 500 to 218,750 last week.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

U.S. job growth cools; unemployment rate falls to 3.7 percent

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 slowed sharply in September likely as Hurricane Florence depressed restaurant and retail payrolls, but the unemployment rate fell to near a 49-year low of 3.7 percent, pointing to a further tightening in labor market conditions.

The Labor 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.

“The weaker gain in payrolls in September may partly reflect some hit from Hurricane Florence,” said Michael Pearce, senior U.S. 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 percent.

Fed Chairman Jerome Powell said on Tuesday that the economy’s outlook was “remarkably positive” and he believed it was on the cusp of a “historically rare” era of ultra-low unemployment and tame inflation.

The U.S. central bank raised rates last week for the third time this year and removed the reference in its post-meeting statement to monetary policy remaining “accommodative.”

The Labor Department said it was possible that Hurricane Florence, which lashed South and North Carolina in mid-September, could have affected employment in some industries. It said it was impossible to quantify the net effect on employment.

Payrolls are calculated from a survey of employers, which treats any worker who was not paid for any part of the pay period that includes the 12th of the month as unemployed. The average workweek was unchanged at 34.5 hours in September.

The smaller survey of households from which the jobless rate is derived regards persons as employed regardless of whether they missed work during the reference week and were unpaid as result. It showed 299,000 people reported staying at home in September because of bad weather. About 1.5 million employees worked part-time because of the weather last month.

U.S. stock index futures briefly turned positive after the data before reversing course. The dollar <.DXY> was trading lower against a basket of currencies while U.S. Treasury yields were higher.

DIMINISHING SLACK

The drop of two-tenths of a percentage point in the unemployment rate from 3.9 percent in August pushed it to levels last seen in December 1969 and matched the Fed’s forecast of 3.7 percent by the end of this year.

Average hourly earnings increased 0.3 percent in September after a similar rise in August.

With September’s increase below the 0.5 percent gain notched during the same period last year, the annual rise in wages fell to 2.8 percent from 2.9 percent in August, which was the biggest advance in more than nine years.

Wage growth remains sufficient to keep inflation around the Fed’s 2 percent target. As more slack is squeezed out of the labor market, economists expect annual wage growth to hit 3 percent.

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.

While surveys have shown manufacturers growing more concerned about an escalating trade war between the United States and China, it does not appear to have affected hiring. In fact, the Fed’s latest survey of national business conditions reflected concerns about labor shortages that are extending into non-skilled occupations as much as about tariffs.

Washington last month slapped tariffs on $200 billion worth of Chinese goods, with Beijing retaliating with duties on $60 billion worth of U.S. products. The United States and China had already imposed tariffs on $50 billion worth of each other’s goods. The trilateral trade agreement between the United States, Canada and Mexico was salvaged in an 11th-hour deal on Sunday.

Despite the Trump administration’s protectionist trade policy, the trade deficit continues to deteriorate. The trade gap increased 6.4 percent to a six-month high of $53.2 billion in August, the Commerce Department reported on Friday.

The politically sensitive goods trade deficit with China surged 4.7 percent to a record high of $38.6 billion.

(Reporting by Lucia Mutikani; Editing by Leslie Adler and Paul Simao)

Record U.S. job openings, quits rate boost wage growth outlook

FILE PHOTO: People attend 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/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job openings surged to a record high in July and more Americans voluntarily quit their jobs, pointing to sustained labor market strength and confidence that could soon spur faster wage growth.

The Labor Department’s monthly Job Openings and Labor Turnover Survey, or JOLTS, released on Tuesday also suggested a further tightening in labor market conditions, with employers appearing to increasingly have trouble finding suitable workers.

While the tightening labor market could boost wage gains, some economists warned that worker shortages could over time negatively impact economic growth. The JOLTS report cemented expectations the Federal Reserve will raise interest rates at its Sept. 25-26 policy meeting. The Fed has raised rates twice this year.

“The economic expansion is on a collision course with a lack of workers to man the shop floors, work the restaurants and stores at the shopping malls across America,” said Chris Rupkey, chief economist at MUFG in New York. “No workers, no growth, it’s that simple.”

Job openings, a measure of labor demand, increased by 117,000 to a seasonally adjusted 6.9 million in July. That was the highest level since the series started in December 2000. The jobs openings rate was 4.4 percent, unchanged from the previous month and an all-time high first touched in April.

The current level of job openings means there is a job for every one of the 6.2 million people who were unemployed in August. Hiring was little changed at 5.7 million in July, keeping the hiring rate at 3.8 percent for a second straight month.

There were 46,000 unfilled jobs in the finance and insurance industry in July. Nondurable goods manufacturing had 32,000 vacancies. The job opening rate in the overall manufacturing industry climbed to a record high of 3.8 percent in July from 3.6 percent in June.

But job openings in the retail trade industry fell by 85,000. There were also decreases in education and federal government job vacancies in July.

WORKER SHORTAGES

The scarcity of workers was also corroborated by a survey of small businesses published on Tuesday. The NFIB survey found that job openings at small businesses hit a 45-year high in August. A record number of businesses reported they could not find qualified workers to fill open positions.

According to the NFIB, job openings were mostly prevalent in construction, manufacturing and wholesale trade. There was also a dearth of truck drivers.

“Looming shortages of qualified workers could prove detrimental to business expansion plans in coming months,” Dante DeAntonio, an economist with Moody’s Analytics in West Chester, Pennsylvania. “In the meantime, the increasing tightness in the labor market is spurring more workers to re-enter the workforce as well as leave their jobs in search of better opportunities.”

The worker shortages, especially for truck drivers, are already contributing to bottlenecks in the supply chain, which could slow the vibrant economy. The economy grew at a 4.2 percent annualized rate in the second quarter, almost double the 2.2 percent pace set in the January-March period.

Growth this year is expected to top 3 percent.

The Labor Department’s JOLTS report also showed the robust labor market is giving Americans confidence to quit their jobs for other positions. The quits rate increased to 2.4 percent in July, the highest level since April 2001, from 2.3 percent in June. Fed officials look at the quits rate as a measure of job market confidence.

The increase in job mobility supports economists’ optimism that job growth may be finally on a faster path. The government last week reported a surge in annual wage growth in August, with average hourly earnings increasing 2.9 percent, the largest gain since June 2009, from 2.7 percent in July.

Wage gains have largely remained moderate even as the unemployment rate has dropped to near an 18-year low of 3.9 percent.

“Workers are leveraging the tighter labor market to find new opportunities and employers are poaching workers from other firms,” said Nick Bunker, an economist at job search website Indeed in Washington. “The next question is how more quitting will translate into higher wage growth.”

 

(Reporting by Lucia Mutikani; Editing by Paul Simao)