US hiring resilient with gain of 128,000 jobs in October

Washington

US HIRING was unexpectedly resilient in October and prior months saw sharp upward revisions, offering hope that the labour market can propel consumers to keep spending and extend the record-long expansion despite weak business investment and trade tensions.

Stock futures and the dollar rose while Treasuries dropped. Payrolls rose 128,000 after an upwardly revised 180,000 advance the prior month, according to a Labor Department report Friday that exceeded the median 85,000 estimate in Bloomberg's survey.

That includes a strike-driven 41,600 decline in carmaker payrolls and 20,000 temporary census workers leaving their jobs. The jobless rate edged up to 3.6 per cent from a half-century low.

Average hourly earnings climbed 3 per cent from a year earlier, matching projections after an upward revision the prior month, though the 0.2 per cent monthly gain was slightly below estimates.

The report validates the Federal Reserve's characterisation of the job market as "strong" and reinforces the central bank's signal on Wednesday it would pause after its third interest-rate cut.

With businesses pulling back on fixed investment, solid gains in hiring and wages will help drive growth and support President Donald Trump's bid for re-election in 2020.

Revisions added 95,000 jobs for the prior two months, bringing the three-month average to 176,000, though gains remain below 2018 levels. The jobs data come on the heels of reports this week including third-quarter gross domestic product reading.

The economy grew at a 1.9 per cent annualised pace as consumer spending grew 2.9 per cent - a step down from gangbusters growth in the prior period but exceeding last year's average.

Stocks also hit a record high, even as the figures showed business investment fell for a second straight period and the most since 2015.

Manufacturers subtracted 36,000 jobs, the biggest drop since 2009, though it would likely have been a gain without the effects of the strike. Still, even excluding the impact of the walkout, the sector has become increasingly fragile amid slowing global growth, a strong dollar and an ongoing trade war with China.

The strike may also have hit wages in October. Average hourly earnings rose 0.2 per cent from the prior month, below estimates, following little change the prior month. Annual wage gains have cooled since hitting a peak of 3.4 per cent early in the year.

Hours worked were unchanged at 34.4 per week. The job gains were led by leisure and hospitality, education and health services and professional and business services. Construction and finance also posted gains.

Even retail jobs rose, registering back-to-back gains for the first time in more than a year following seven straight declines. The share of working-age people in the labour force increased to 63.3 per cent as more Americans were pulled from the sidelines and into the workforce.

The U-6, or underemployment rate, ticked up to 7 per cent from the lowest since 2000. Some analysts see this figure as a more accurate reflection of the true labour market as it includes part-time workers who'd prefer a full-time position and those who aren't actively looking. BLOOMBERG