US jobless rate likely to fall 18-year low

Published: October 05, 2018 14:44:57 | Updated: October 08, 2018 13:20:48

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The jobless rate in United States is expected to fall to an 18-year low of 3.8 per cent as the economy likely created jobs at a brisk clip in September, signaling a further tightening in labour market conditions.

The Labor Department’s closely watched monthly employment report on Friday is also expected to show a steady rise in wages, suggesting moderate inflation pressures, which could ease concerns about the economy overheating and keep the Federal Reserve on a path of gradual interest rates increases.

Nonfarm payrolls likely increased by 185,000 jobs last month after surging 201,000 in August, according to a Reuters survey of economists.

September’s anticipated job gains would match the monthly average for the past three months.

The economy needs to create roughly 120,000 jobs per month to keep up with growth in the working-age population.

“The labour market remains healthy, and we think the Goldilocks scenario of decent economic growth with tame inflation is poised to continue,” said Aaron Anderson, head of research at Fisher Investments in San Francisco.

Fed Chairman Jerome Powell said on Tuesday that the economy’s outlook was “remarkably positive” and he believed it was on the cusp of a “historically rare” era of ultra-low unemployment and tame inflation.

The US central bank raised interest rates last week for the third time this year and removed the reference in its post-meeting statement to monetary policy remaining “accommodative.”

A robust labour market is underpinning the economy and together with high savings could support consumer spending as the stimulus from the Trump administration’s $1.5 trillion tax cut package fades.

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