WASHINGTON: The US unemployment rate dropped to near a 50-year low of 3.5 per cent in September, with job growth increasing moderately, suggesting the slowing economy could avoid a recession for now despite trade tensions that are hammering manufacturing.
The Labour Department’s closely watched monthly employment report on Friday, however, contained reminders that the risks to the longest economic expansion on record remained tilted to the downside. Wage growth stagnated and manufacturing payrolls declined for the first time in six months. The retail and utilities sectors also continued to shed jobs.
The report followed a string of weak economic reports, including a plunge in manufacturing activity to more than a 10-year low in September and a sharp slowdown in services industry growth to levels last seen in 2016, that heightened fears the economy was flirting with a recession.
“The unemployment rate usually rises ahead of a recession, so a fresh decline pushes out the timeline for any potential recession into late 2020 at the earliest,” said Josh Wright, chief economist at iCIMS in New York.
The two-tenths of a percentage point drop in the unemployment rate from 3.7 per cent in August pushed it to its lowest level since December 1969. The jobless rate, which had been stuck at 3.7 per cent for three straight months, declined even as 117,000 people entered the labour force last month.
Nonfarm payrolls increased by 136,000 jobs last month, the government’s survey of establishments showed. The economy created 45,000 more jobs in July and August than previously estimated. Economists polled by Reuters had forecast payrolls would increase by 145,000 jobs in September. — Reuters
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