Monday 19 November, 2018

US hiring picked up in August as pay surged most in 9 years

This photo shows a help wanted sign at a new Zaxby's restaurant in Madison, Mississippi. (AP Photo)

This photo shows a help wanted sign at a new Zaxby's restaurant in Madison, Mississippi. (AP Photo)

The pace of hiring in the United States quickened in August, and wages grew at their fastest pace in nine years — evidence that employers remain confident despite the Trump administration's ongoing conflicts with its trading partners.

The economy added a strong 201,000 jobs, and the unemployment rate stayed at 3.9 percent, near an 18-year low, the government said Friday in its monthly jobs report.

Taken as a whole, the data pointed to a job market that remains resilient even after nearly a decade of economic growth — the second-longest such stretch in U.S. history — and even with tariffs and counter-tariffs on imports and exports looming over U.S. employers that rely on global trade.

The economy is expanding at a healthy pace, fueled by tax cuts, confident consumers, greater business investment in equipment and more government spending. Growth reached 4.2 percent at an annual rate in the April-June quarter, the fastest pace in four years.

"I view this as the strongest job market in a generation," Andrew Chamberlain, chief economist at Glassdoor, a career website.

Even while reporting a robust job gain for August, the Labor Department revised sharply down its estimate of hiring in June and July. The government now says employers added 50,000 fewer jobs in those two months combined than it had previously estimated.

But the 201,000 job gain in August was nearly equal to the average gain of 196,000 over the prior 12 months, evidence of how consistent job growth remains.

Average hourly pay jumped 0.4 percent in August and increased 2.9 percent compared with a year earlier. That's the fastest annual gain since June 2009, when the Great Recession ended. Still, rising inflation, which also reached 2.9 percent in July from a year earlier, has offset that gain.

Yet most economists said they saw the pay increase as an encouraging sign that the low unemployment rate is compelling more employers to raise pay in order to compete successfully for workers.

"It looks like we're finally seeing that acceleration in wage growth that we've been waiting for," said Gus Faucher, chief economist at PNC Financial Services. "It's good news for workers' paychecks, it's good news for consumers and it's good news for the overall economy."

The rising wage and jobs data make it a near-certainty that the Federal Reserve will raise short-term interest rates when it meets later this month, economists said. Most Fed watchers also expect another rate hike in December and perhaps two more next year.

Consumer confidence rose in August to its highest level in nearly 18 years. Most Americans feel that jobs are widely available and expect the economy to remain healthy in the coming months, according to the Conference Board's consumer confidence survey.

In August, factories expanded at their quickest pace in 14 years, according to a survey of purchasing managers. A manufacturing index compiled by a trade group reached its highest point since 2004.

Not all the economic news has been positive. Higher mortgage rates and years of price increases are slowing the housing market. Sales of existing homes dropped in July for a fourth straight month.

Many economists also worry that President Donald Trump will soon follow through on a threat to impose tariffs of up to 25 percent on $200 billion of imports from China. That would be in addition to $50 billion in duties already imposed.

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