Oct 3, 2014 4:36 PM
Surge of hiring cuts US jobless rate to 5.9 pct.
The Associated Press
WASHINGTON (AP) A surge in hiring last month helped drive the nation's unemployment rate down to a six-year low of 5.9 percent within striking distance of what economists consider a healthy level.
The encouraging numbers contained in the last government report on unemployment before the midterm elections pushed the Dow Jones average up 209 points to 17,010 and could give an important boost at the polls to Democrats and to incumbents in general.
U.S. employers added a robust 248,000 jobs in September and generated 69,000 more jobs in July and August than previously reported, the government said Friday. That helped bring unemployment down from 6.1 percent in August.
The jobless rate now stands at the lowest level since July 2008, in the middle of the Great Recession, and is getting close to the roughly 5.5 percent that the Federal Reserve considers consistent with a healthy economy.
In a speech in Princeton, Indiana, President Barack Obama exulted over the numbers, noting that businesses have added jobs for 55 months in a row, the longest such stretch on record.
He credited "the drive and determination of the American people," and added: "It's also got a little bit to do with some decisions we made pretty early on in my administration."
Nevertheless, other gauges of the job market still bear scars from the recession. Wages aren't rising. And the number of people out of a job for more than six months or stuck in part-time jobs when they want full-time ones remains elevated.
An Associated Press-GfK poll found that the economy is the top issue in voters' minds as the Nov. 4 elections near, and while most signs point toward improvement, 62 percent of likely voters still consider the economy "poor," little changed from two years earlier.
Given the latest conditions, the Fed may not move up its timetable for raising interest rates to control inflation, economists say. Most expect the Fed won't act until the middle of next year.
Friday's data "are generally consistent with the Fed's economic forecasts and therefore should not change their thinking," Doug Handler, an economist at IHS Global Insight, said in a note to clients.
The Fed has kept its benchmark interest rate near zero for almost six years in an effort to encourage more borrowing, spending and growth.
When the Fed begins raising the rate, the effects will ripple throughout the economy and could have a profound impact on businesses and consumers. Rates for mortgages, auto loans and credit cards will probably rise. Businesses may cut back on borrowing. And stock markets frequently drop when rates rise.
Lower unemployment usually forces up wages as employers bid for a dwindling supply of job-hunters. Higher paychecks can also push up prices. Some Fed policymakers have already warned that unemployment is low enough to spur higher inflation.
But Fed Chair Janet Yellen has said the unemployment rate may exaggerate the strength of the job market.
For example, there were 7.1 million people working part-time jobs last month even though they want full-time work. That figure is up from just 4.6 million before the recession.
And among the 9.3 million unemployed, 3 million have been out of work for more than six months. That figure has declined in the past three years but is still more than twice its precession level.
Another example: The share of adults working or looking for work fell to just under 63 percent last month, the lowest level in 36 years. That's down from 66 percent before the recession.
About half that decline has occurred because of increasing retirements by baby boomers and other demographic changes, economists say. But much of the rest has occurred because many of the unemployed have gotten discouraged and have given up looking for work.
Average hourly pay fell a penny last month to $24.53. In the past year, it has increased just 2 percent. That's barely ahead of the 1.7 percent inflation rate. In a healthy economy, wages usually rise 3.5 percent to 4 percent a year.
Last month's job gains occurred in many higher-paying industries. Professional and business services, a category that includes engineers, accountants and architects, added 81,000 jobs, the most in seven months. Construction companies added 16,000 jobs, while government jobs, which usually pay solid wages, rose 12,000.
Many economists boosted their economic forecasts after the report and now expect growth will reach an annual rate of 3.5 percent in the July-September quarter. That would follow the healthy 4.6 percent pace in the second quarter.
Contact Chris Rugaber on Twitter at http://Twitter.com/ChrisRugaber .