The US economy continued to produce more jobs in September and the US unemployment rate has not been this low since the 1960s. However, there is still little sign of any pressure pushing wage growth above 3%.
According to the US Bureau of Labor Statistics, the US economy created 134,000 jobs in the non-farm sector in September. However, the latest figures also include upward revisions to previous employment numbers and figures for July and August were revised up by a total of 105,000 positions.
ANZ head of Australian Economics David Plank, viewed the figures as broadly in line with expectations but noted the lack of growth in one particular area. “Although headline US non-farm payrolls undershot expectations, upward revisions to the previous two months left the figures around expectations in aggregate. Average hourly earnings were as expected at 2.8%…despite the booming economy, wages are still struggling to accelerate.”
September ADP figures, which had come out a few days prior to this report, suggested September would be a strong month for employment growth. However, weather conditions during the month was expected to play some role. As the Finance AM team at Westpac put it, “Hurricane Florence held back payrolls with an elevated number of workers reporting they were unable to work due to bad weather.”
Economists were expecting around 188,000 additional positions but the revisions to previous months’ figures seemed to be enough to counteract any disappointment. US financial markets reacted by sending bond yields higher while the US dollar was weaker against other major currencies. At the close of business, US 2-year bond yields were 2bps higher at 2.88%, 10-year yields had increased by 4bps to 3.23% and the yield on 30-year Treasury bonds had gained 5bps to 3.40%.