US sees accelerated hiring, jobless rate touches six-year low

US non-farm payrolls rose by 248,000 last month and the jobless rate fell two-tenths of a point to 5.9 per cent, the lowest since July 2008.

By: Reuters | Washington | Published:October 5, 2014 1:16 am
fair-L A job fair for military veterans in California on Friday. (source: Reuters)

US employers ramped up hiring in September and the jobless rate fell to a six-year low, bolstering bets the Federal Reserve will hike interest rates in mid-2015.

Friday’s report on employment is the most significant gauge of the economy’s health ahead of November 4 congressional elections.

While US President Barack Obama’s message of an improving economy has been hampered by weakness in wages that persisted through last month, the data nevertheless underscored the strides the labour market has made this year.

US non-farm payrolls rose by 248,000 last month and the jobless rate fell two-tenths of a point to 5.9 per cent, the lowest since July 2008, the US Labor Department said.

The data was generally stronger than Wall Street analysts had anticipated, and investors doubled down on bets the Fed will raise interest rates in mid-2015. The central bank has kept benchmark rates near zero since 2008 to encourage investment and hiring.

Most of Wall Street’s top bond firms still see the Federal Reserve starting to raise interest rates no later than June of next year and said the bond market was under-pricing the risk that the US central bank may move more aggressively once it starts tightening policy, a Reuters survey showed on Friday.

Still, analysts noted the report bore a large caveat in the form of persistently stagnant wages. Average hourly earnings actually slipped a penny last month.

While weak wage growth is keeping Fed policymakers cautious about the timing of their first rate hike, the pace of hiring has stepped up significantly this year. The gain in payrolls over the last six months was the strongest for any six-month period since before the 2007-09 recession.

In a further sign of strength, 69,000 more jobs were created in July and August than previously estimated.

US stocks rose and yields on US government debt moved up, while the dollar continued a rally that has been in place for weeks. The employment gains last month were broad-based.

Notably, part of the decline in the unemployment rate was because workers left the labour force. The share of the population with jobs or hunting for one fell to 62.7 per cent, its lowest level since 1978. That rate has declined in recent years as more workers have retired and as people have given up job hunts due to a weak economy.

Still, a measure of unemployment that partially takes into account worker discouragement fell to 11.8 per cent, its lowest level since October 2008. In a sign the economy’s expansion is moderating from the second quarter’s torrid pace, a separate report showed growth in the US services sector eased in September.

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