US employment rises 214,000 in October as unemployment rate drops to 5.9%
America’s labour market continued to improve in October, as employers added more than 200,000 workers for the eighth time in nine months, while the unemployment rate declined unexpectedly.
Employers added 214,000 nonfarm payrolls in October, following an upwardly revised gain of 256,000 in September, the Labor Department reported today in Washington. The gain was less than forecasts, which called for 231,000.
The unemployment rate declined further in October, falling 0.1 percentage point to 5.8 percent, a fresh six-year low. The participation rate – the percentage of workers employed or actively searching for work – edged up to 62.8 percent from 62.7 percent. The employment-population ratio improved to 59.2 percent, the highest reading since 2009.
The average work week for all employees increased 0.1 hour to 34.6 hours, official data showed.
Since January the US economy has added 1.2 million workers. The unemployment rate has dropped 0.8 percentage points over the same period.
October’s gains came mainly from food services and drinking places, retail trade and health care, official data showed. Employment in professional and business services, manufacturing and transportation and warehousing continued to trend up.
Employment in mining, wholesale trade, financial services, information and government was little changed from September.
Another brisk month of job growth failed translate into bigger earnings. Average hourly earnings edged up only 0.1 percent in October after stagnating a month earlier. Economists forecast hourly earnings to increase 0.2 percent.
Compared to October 2013, average earnings rose 2 percent, official data showed.
Tepid earnings growth could derail the Federal Reserve’s timetable for interest rate normalization. The Fed ended its record bond buying program last month, but has made no indication about when it will begin lifting interest rates. Given the performance of the US dollar in recent months, the markets are betting that policymakers hike rates sooner than previously expected.
However, stubbornly weak earnings growth could dampen consumer demand and weigh on the recovery efforts. These consequences will probably deter the Fed from acting too quickly.
The Federal Reserve would not be the first central bank to be discouraged by weak earnings growth. Earlier this year the Bank of England effectively put its rate-hike plans on hold in response to stubbornly low pay growth.
The US dollar remained elevated following the employment report, as the US dollar index continued to hold the 88.0 level after breaching it for the first time since June 2010. The dollar index, which tracks the performance of the greenback against a basket of currencies, consolidated at 88.01, little changed from the previous close.
The greenback declined sharply against its Canadian counterpart after Canada posted its first back-to-back months of job growth this year. Canadian employers added 43,100 workers last month, after adding 74,100 in September. The unemployment rate declined 0.3 percentage points to 6.5 percent, a nearly six-year low.
The USDCAD bottomed out at 1.1330. The pair subsequently consolidated at 1.1358, advancing 0.6 percent.
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