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US employment and wages grow less than forecast in ‘mixed bag’ report



US employment rose less than expected last month and wage growth slowed, although the jobless rate fell to a 50-year low.

Private employers added 114,000 jobs, fewer than the 122,000 added in August, according to a Labor Department report on non-farm payrolls on Friday. Economists had forecast a gain of 130,000 jobs. Employment in all sectors increased by 136,000, also less than predicted.

Average hourly earnings rose 2.9 per cent from a year earlier, the weakest rise in more than a year. The jobless rate unexpectedly dropped to 3.5 per cent, the lowest since December 1969.

US stocks rose after the release, while the dollar remained lower.

The shaky numbers add to signs that Donald Trump’s trade policy and weakness abroad pose an increasing threat to growth in the world’s largest economy. At the same time, the unemployment rate decline gave him a chance to boast, which he promptly did on Twitter minutes after the report.

Torsten Slok, Deutsche Bank Securities chief economist, said: “Overall it is a bit of a mixed bag.” But the main payrolls number along with weakness in manufacturing add to evidence that the trade war is putting “downward pressure both on hiring and the economy”.

A release earlier in the week showed that US manufacturing sank deeper into contraction, with the key measure the worst in a decade. An economic slowdown threatens Mr Trump’s re-election prospects next year, with the president frequently staking his message on a strong economy.

The job gains in the Friday report were concentrated in health care, and professional and business services. Retail employment contracted for an eighth straight month, while payroll growth in construction remained tepid.

Manufacturers shed 2,000 jobs, probably reflecting the slowdown at factories, seen also in data from the Institute for Supply Management.

Factory employment may be poised to fall further in coming months with General Motors workers on strike. About 46,000 employees walked out 15 September, which was too late in the month to be captured in the Labor Department’s survey though may affect readings for October. The strike may already be impacting wages and hours worked.

The U-6, or underemployment rate, slipped to 6.9 per cent, the lowest since 2000, from 7.2 per cent. Some analysts see this as a more accurate reflection of the labour market as it includes part-time workers who would prefer a full-time position and those who are not actively looking.



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