U.S. economy added 128,000 jobs in October, summer gains revised upward
While the GM strike didn't torpedo jobs numbers, monthly gains are down 60,000 from 2018 average
U.S. employers added a solid 128,000 jobs in October, a figure that was held down by a now-settled strike against General Motors that caused several thousand workers to be temporarily counted as unemployed.
The Labor Department also said Friday that the unemployment rate ticked up from 3.5 per cent to 3.6 per cent, still near a five-decade low. For a second straight month, average hourly wages rose 3 per cent from a year ago.
The GM strike contributed to the loss of 41,600 auto factory jobs in October. But the settlement will likely lead to a rebound in the coming months. The report revised upward job gains in the prior two months by a combined 95,000, suggesting a healthier job market than initially believed.
Still, hiring has slowed this year. Gains averaged just 167,000 in the past 10 months, down from a monthly average of 223,000 in 2018, according to Labor Department figures.
Even so, job growth, remains high enough to keep the unemployment rate from rising in an otherwise mostly lacklustre economy. On Wednesday, the government estimated that the economy grew in the July-October quarter at a modest 1.9 per cent annual rate.
Surveys suggest that employers have turned cautious in large part because of heightened uncertainties caused by U.S. President Donald Trump's trade conflicts. The president has imposed tariffs on many goods imported to the U.S., and other nations have retaliated with import taxes on U.S. exports.
One result is that companies, especially in manufacturing, construction and retail but also in some other sectors, have slowed their hiring or have stopped hiring altogether.
Trump, however, was in a buoyant mood after what he characterized as a "blowout" jobs report.
"This is far greater than expectations," he said.
Sluggish wage growth
Consumers, who drive about 70 per cent of U.S. economic activity, have remained generally resilient. In September, they modestly stepped up their spending, and their incomes grew fast enough to let them save more, too. A rising saving rate is encouraging because it suggests that households have leeway to keep spending and supporting an economic expansion that has entered a record-breaking 11th year.
At the same time, businesses have been a drag on the economy in recent months. Collectively, they have slashed their spending on industrial machinery and other equipment, mostly because the U.S.-China trade war has made them reluctant to commit to big purchases. The tariffs between the U.S. and China, the world's two largest economies, have also reduced U.S. exports.
October is the usual start of hiring for the holiday shopping season. But the rise of e-commerce and increasing concentration of wealth in large U.S. metros have corresponded with the loss of more than 70,000 jobs at retailers this year. This trend could further diminish hiring by the retail sector.
Sluggish pay growth is another source of concern. Hourly average earnings had been rising at a 3.4 per cent annual rate back in February, significantly above the 3 per cent pace in October.
The low unemployment rate and a shortage of qualified workers in many industries have nevertheless failed to accelerate wages across the job market as traditional economy theory would suggest.
Still, data tracked by the jobs site Glassdoor indicates that wage gains should start to rebound as companies continue to compete for workers in the hottest job markets.
Construction starts still concerning
Meanwhile, the Commerce Department said Friday that construction spending rose 0.5 per cent in September, boosted by government and private residential projects.
The September increase comes as the previous August gain of 0.1 per cent was revised down to -0.3 per cent.
Private residential construction increased 0.6 per cent, with single family home construction up 1.3 per cent but apartment building or multi-family home projects falling 0.7 per cent.
Overall construction after adjusting for seasonal variations came in at an annual rate of $1.29 trillion, 2 per cent lower than September 2018.
During the first nine months of 2019, U.S. construction spending was $968.7 billion, a drop of 2.2 per cent from the first nine months of 2018.