WASHINGTON, U.S. - This festive season is sure going to be joyous for job seekers in the United States. After years of steady rise in the unemployment rate, the U.S. labour ...
• Workers in U.S. to get a minimum of $25.92 per hour
• Strong job report continues stock market growth
• Feds to hike rates to avoid inflation
WASHINGTON, U.S. - This festive season is sure going to be joyous for job seekers in the United States.
After years of steady rise in the unemployment rate, the U.S. labour market has finally taken a lift, reporting 161,000 job additions in the month of October.
For existing employees, there is a good news too as all the private sector workers are set to get a 2.8 percent pay rise.
On Friday, the U.S. labour department announced that the unemployment rate has dipped to 4.9 percent from 5 percent in September.
With the new hike in pay, workers will be entitled to $25.92 an hour, marking the biggest yearly hike in the last seven years.
The report suggests that the nation is continuing its steady progress in job creation, despite poor economic growth.
Jed Kolko, Chief Economist at Indeed said, “If you wanted to show that the economy is still getting better for the typical voter, this report gives you what you needed.”
"This was a very good report. With the hourly wage number beginning to accelerate, the Fed will have all the cover it needs to raise rates in December," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.
According to the report, share of prime-age workers per job also grew to 78.2 percent, marking the highest level for the employment-to-population ratio since the recession in 2009.
The addition of the 161,000 jobs is double the number needed to absorb the growing population in the country.
Till October, the economy has added 181,000 jobs per month on average but the job addition has slowed down following massive hiring in the previous months. In 2015, the average recruitment was 229,000.
October’s hiring was dominated by professional and business services, which mostly offers higher-paying jobs in engineering, accounting and information technology. Those two categories added around 43,000 jobs followed by healthcare firms with 39,100.
However, following a decline in the energy industry, manufacturing and mining industry have lost jobs and without gaining any for the third consecutive month.
Retail employment was also not noteworthy, even though companies announced plans for holiday hiring.
Stocks rise positively
As the hiring continues to show growth, stock market too went up, continuing the growth for the ninth straight day.
As of 12.14pm ET, industries on average added 43 points, or 0.2 percent, to 17,974.
The Standard & Poor's 500 index also grew by 9 points, or 0.5 percent, to 2,098.
The Nasdaq composite increased by 23 points, or 0.5 percent to 5,081.
However, investors are tracking the U.S. presidential election as the Republican Presidential nominee, Donald Trump is an unknown candidate to them.
As the election day closes in, Democrat Hillary Clinton has taken a meagre lead over Trump. But as the race to the White House intensifies, investors are banking on certainty - which Trump has so far, failed to offer. His policies have been unclear and uncertainty has caused trouble in the financial sector.
Joshua Mahony, Market Analyst at IG said, “No one really knows what Trump would do should he get into power, probably not even himself. It is that uncertainty that is driving the market negativity that has dominated this week.”
Trump's campaign team however described the report as ‘disastrous’ and said, “It underscores the total failures of the Obama-Clinton economy that delivers only for donors and special interests and robs working families.”
Fed to hike rates
There was a definite indication from the Feds that interest rate would go up in December.
It believes if interest rates don’t move, inflation may spike as unemployment level is close to the level of inflation.
Earlier, Feds said it was waiting for further evidence of tightening labour market and growing inflation.
Traders expect rates to grow by over 70 percent by December.
Paul Ashworth, Chief Economist at Capital Economics said, “I think there is clear evidence that both wage grown and underlying price inflation are accelerating and this will force the Fed to raise interest rates faster than their own projections suggest,” Ashworth said.
“I’m not suggesting a radical shift. It is a slow burning thing,” he added.