US adds robust 250,000 jobs in October; pay growth fastest since 2009
US trade gap grew to $54 billion in September
WASHINGTON – U.S. employers added a stellar 250,000 jobs last month and raised average pay by the most in nearly a decade.
The Labor Department's monthly jobs report, the last major economic data before Tuesday's congressional elections, also showed that the unemployment rate remained at a five-decade low of 3.7 percent.
The influx of new job-seekers in October increased the proportion of Americans with jobs to its highest level since January 2009.
Consumers are the most confident they have been in 18 years and are spending freely and propelling brisk economic growth. The U.S. economy is in its 10th year of expansion, the second-longest such period on record, and October marked the 100th straight month of hiring, a record streak.
The resulting strength in customer demand has led companies to steadily add workers. Though economists predict that hiring will eventually slow as the pool of unemployed Americans dwindles, there's no sign of that happening yet.
Still, the latest month of healthy job growth might not tip many votes in the midterm elections. Polls have suggested that while Americans generally approve of the economy's performance, that sentiment hasn't necessarily broadened support for President Donald Trump or Republican congressional candidates.
In October, consumer confidence reached its highest point in 18 years, propelled by optimism about the job market. Last month's plunge in stock prices didn't dampen Americans' enthusiasm, though the survey was conducted in the first half of October, before the full market decline had occurred.
In the July-September quarter, consumer spending grew by the most in four years and helped the economy expand at a 3.5 percent annual rate. That growth followed a 4.2 percent annual pace in the April-June quarter. Combined, the two quarters produced the strongest six-month stretch of growth in four years.
Manufacturing output and hiring remain healthy, according to a survey by a private trade association, although increased tariffs have raised factory costs.
By contrast, housing remains a weak spot in the economy, with sales of existing homes having fallen for six straight months as mortgage rates have risen to nearly 5 percent. But slower sales have started to limit home price increases, which had been running at more than twice the pace of wage gains.
There are signs that pay growth is picking up. A measure of wage and salaries rose 3.1 percent in the third quarter from a year earlier, the best such showing in a decade.
Although pay increases can help boost spending and propel the economy's growth, they can also lead companies to raise prices to cover their higher labor costs. That trend, in turn, can accelerate inflation.
So far, though, inflation remains in check. The Federal Reserve's preferred price measure rose 2 percent in September compared with a year earlier, slightly lower than the year-over-year increase in August.
US trade gap grew to $54 billion in September
Record imports expanded the U.S. trade deficit for the fourth straight month in September, as the politically sensitive trade deficit in goods with China hit a record.
The Commerce Department said Friday that the gap between what America sells and what it buys abroad climbed to $54 billion, up 1.3 percent from $53.3 billion in August and the highest level since February.
Imports climbed 1.5 percent to a record $266.6 billion, led by an influx of telecommunications equipment and clothing. Exports also rose 1.5 percent to $212.6 billion, led by increases in shipments of civilian aircraft and petroleum products.
President Donald Trump has made a priority of reducing America's huge, persistent trade deficits. Despite his tariffs on imported steel and aluminum and on Chinese goods, the deficit so far this year is up 10.1 percent to $445.2 billion. The goods deficit with China rose by 4.3 percent in September to a record $40.2 billion.
China and other countries have counterpunched with import taxes on American products. U.S. exports of soybeans, targeted for retaliatory tariffs by China, dropped 29.4 percent in September.
Trump sees the lopsided trade numbers as a sign of U.S. economic weakness and as the result of bad trade deals and abusive practices by U.S. trading partners, especially China.
Mainstream economists view trade deficits as the result of an economic reality unlikely to yield to changes in trade policy: Americans buy more than they produce, and imports fill the gap. The strong U.S. economy also encourages Americans to buy more foreign products.
U.S. exports are also hurt by the American dollar's role as the world's currency. The dollar is usually in high demand because it is used in so many global transactions. That means the dollar is persistently strong, raising prices of U.S. products and putting American companies at a disadvantage in foreign markets.
In September, the U.S. ran a $23.2 billion surplus in the trade of services such as banking and tourism. But that was offset by a $77.2 billion deficit in the trade of goods such as cellphones and cars.
Copyright 2018 by WDIV ClickOnDetroit. The Associated Press contributed to this report. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.