U.S. payrolls rise more than forecast as wage gains hit 3.1%

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Between September and October, the USA jobless rate remained unchanged at 3.7% as total nonfarm payroll employment gains were posted primarily in health care, manufacturing, construction, and transportation and warehousing.

Employers added 250,000 jobs in October, more than analysts expected, as the jobless rate remained at 3.7 percent, a almost 50-year low, the Labor Department said Friday.

The influx of new job-seekers lifted the proportion of Americans with jobs to the highest level since January 2009.

Wages grew 3.1%, relatively robust growth after years of stagnant paychecks. Average hourly earnings rose 3.1 percent in October from a year earlier, the sharpest year-over-year gain since 2009.

Acosta also said noted that Hurricane Michael's path through the Florida Panhandle on October 10 had no discernible effect on employment data or responses to the monthly labor survey.

The Federal Reserve, which has already pushed through three quarter-point interest rate rises this year, is widely expected to raise rates by another quarter-point in December from the current range of 2 per cent to 2.25 per cent, with further increases in 2019.

William Stoller, chairman and chief executive of Express Employment Professionals, which is based in Oklahoma City, said pay in light industrial and administrative jobs, for example, had climbed to $14.50 to $15.50 an hour, from roughly $13.60 a year ago.

The Fed is not expected to raise rates at its policy meeting next week, but economists believe October's strong labour market data could see the USA central bank signal an increase in December.

The result was something of a surprise as some economists had expected the hurricane that made landfall on the Florida panhandle in the middle of the employment survey week to depress reports of hiring and worker pay.

As economists often note, one month doesn't make a trend, and the government's monthly jobs numbers are volatile. Analysts are cautiously optimistic after President Donald Trump said Thursday that he plans to meet with Chinese leader Xi Jinping at a multilateral summit this month. People are eager to enter or re-enter the labor force and the pace of hiring remains strong, while wages are growing, meaning more money in the pockets of hardworking Americans. Construction employment grew by 30,000. 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 (SHLDQ.PK). There are also signs that pay hikes are taking hold more firmly: Amazon.com Inc. just raised its minimum hourly wage to $15 for US employees. But in recent months, it appears they have finally taken the step economists have long recommended: Pay more.

"The economy peaked in the second quarter of this year and has been slowing for four to five months", said David Kotok, chair of Cumberland Advisors. In the early 2000s and late 1960s, wages for nonsupervisors, for which more years of data are available, were growing at a 4%-or-better annual pace.

Manufacturing output and hiring remain healthy, according to a survey by a private trade association, although increased tariffs have raised factory costs. The prime-age (25-54) labor force participation rate-which is an important indicator because it is not driven by demographics, but rather by the strength of the job market-increased by 0.4 p.p.to 89.0 percent among men and by 0.6 p.p.to 75.8 percent among women.

There is some concern that higher wages might fuel inflation if companies turn around and increase prices for consumers. And so far, inflation remains in check.

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