The nation's jobless rate dipped to 4.1 percent last month, the lowest level in almost 30 years, while the number of payroll jobs rebounded after being depressed in September by the impact of Hurricane Floyd on the Eastern Seaboard, the Labor Department reported today.
For adult women, the news was even better. Their unemployment rate fell to 3.5 percent, a level matched in only one month since 1953. The rate for adult men was also 3.5 percent, but it has been lower much more recently.
The report triggered a rally on Wall Street as analysts and investors focused on the fact that average hourly earnings of production and nonsupervisory workers rose only 1 cent an hour to $13.37. Analysts said that figure, which underscores the subdued level of inflationary pressures in the economy despite the low unemployment rate, makes it less likely that Federal Reserve officials will raise interest rates when they meet Nov. 16.
But overall, the report showed that the U.S. economic expansion that began in the spring of 1991 is still proceeding at a healthy pace and appears on track to become the longest in American history early next year. Meanwhile, labor markets remain very tight in most parts of the country as the pool of available but unemployed workers continues to shrink, a situation some other analysts cited as a reason the Fed might want to raise rates 10 days from now.
Last month employer payroll jobs rose by 310,000, to 129.3 million, following a small 41,000 gain the previous month, the department said. Except for the hurricane, the September increase would have been about 100,000, department economists estimated, with roughly half of the jobs lost in September regained last month.
Since July payrolls have grown by an average of 160,000 a month, a noticeable slowing from the gains earlier in the year.
"That average shows a clear deceleration from the previous trend," said Mickey Levy, chief economist for Bank of America in New York. "There is mounting evidence that domestic demand growth is slowing, with both housing and auto sales down. At the same time, we are experiencing strong labor productivity gains and very modest wage increases.
"All that together raises the probability that the Fed will remain on hold at the next meeting, Levy said.
Most of the added payroll jobs were in industries that provide services, such as health care, education and recreation. Firms providing services to businesses, including those providing temporary workers, accounted for about one-third of the increase in service jobs. Construction employment registered a healthy gain for the second month in a row.
In contrast, manufacturing payrolls continued to decline even though other indicators show that sector of the economy expanding, a sign that productivity--the amount of goods and services produced for each hour worked--is rising strongly at manufacturing firms. Since June the average monthly drop in factory jobs has been 12,000, down from about 36,000 a month earlier in the year.
Bill Cheney, chief economist at John Hancock Financial Services, agreed with Levy that the report and other recent data suggest the Fed won't raise rates.
"Job growth was solid, but wage pressures were completely absent," Cheney said. "The inflation threat has receded yet again. I can't see the Fed moving now at least until early next year."
In addition, Cheney said, "The traditional relationship between the unemployment rate and wage pressures seems to have been broken. [Fed Chairman] Alan Greenspan no longer has a yardstick to measure whether a 4.1 percent unemployment rate is dangerously low. Right now, with no wage growth, it doesn't look that way."
Some other analysts, including Bruce Steinberg, chief economist at Merrill Lynch & Co. in New York, said the pace of job growth has slowed but that the Fed is still likely to raise rates.
"Job growth is simply too strong for the Fed, given Greenspan's oft repeated fear that the United States is depleting its supply of available workers," Steinberg said. "We expect the Fed to tighten on Nov. 16 but it's not a slam dunk."
While the number of payroll jobs was rising 310,000, workers were also putting in more weekly hours. The length of the average private workweek rose 12 minutes to 37.6 hours; however, in manufacturing the length of the workweek dipped by six minutes to 41.7 hours and overtime fell by the same amount to 4.6 hours.
Meanwhile, the number of people officially unemployed--those without jobs who actively searched for one recently--fell by 70,000 to 5.77 million. An additional 4.02 million people said they would like to have a job but they hadn't looked recently and so were not counted as part of the labor force. That figure also declined last month by about 150,000.
The department said that unemployment among whites was 3.5 percent last month, down from 3.6 percent the month before. For blacks, the rate was unchanged at 8.3 percent, while for persons of Hispanic origin it declined to 6.4 percent from 6.7 percent.