WASHINGTON • US job growth accelerated last month after hurricane-related disruptions hurt employment in September, but there were signs that labour market momentum was slowing as annual wage gains sharply retreated.
Non-farm payrolls increased by 261,000 jobs last month as 106,000 leisure and hospitality workers returned to work, the Labour Department said in its closely watched employment report yesterday.
It was the largest gain since July last year, but was below economists' expectations for an increase of 310,000 jobs.
Data for September was revised to show payrolls rising by 18,000 instead of falling by 33,000 as previously reported. The unemployment rate fell close to a 17-year low of 4.1 per cent because people left the labour force. Still, the data probably does little to change expectations that the Federal Reserve will raise interest rates next month.
The sharp moderation in job growth in September was blamed on hurricanes that affected parts of Texas and Florida in late August and early September, leaving workers, mostly in lower-paying industries such as leisure and hospitality, temporarily unemployed.
Last month's acceleration in employment growth reinforces the Fed's assessment on Wednesday that "the labour market has continued to strengthen and that economic activity has been rising at a solid rate despite hurricane-related disruptions".
The US central bank kept interest rates unchanged on Wednesday and financial markets have almost priced in an increase in borrowing costs next month. The Fed has hiked rates twice this year.
But the return of the lower-paying industry workers held down wage growth last month. Average hourly earnings slipped by one cent, leaving them unchanged in percentage terms. That lowered the year-on-year increase to 2.4 per cent, which was the smallest annual increase since February last year.
Economists, however, remain optimistic that wage growth will accelerate with the labour market near full employment. Last month's one-tenth percentage point drop in the unemployment rate took it to its lowest reading since December 2000. The decline, however, reflected a drop in the labour force. The jobless rate is now below the Fed's median forecast for this year.
For now, tepid wage growth supports views that inflation will continue to undershoot its 2 per cent target and could raise concerns about consumer spending, which appears to have been largely supported by savings this year.
The economy grew at a 3 per cent annualised rate in the third quarter. Economic strength has persisted even as President Donald Trump and the Republican-led Congress have struggled to enact their economic programme.