Job creation, wages slip in September as unemploym

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The numbers: The U.S. unemployment rate sank to a 48-year low of 3.7% in September as the economy added 134,000 new jobs, setting the stage for a strong holiday season to finish out what’s been stellar year for the U.S. economy.

The increase in hiring was the smallest in 12 months and below the recent trend, perhaps reflecting the effects of Hurricane Florence. Economists polled by MarketWatch had forecast a 168,000 increase.

Yet the increase in new jobs was enough to lower the unemployment rate to 3.7% from 3.9%. The last time the jobless rate was lower was in December 1969 — when the first man walked on the moon.

Many economists predict the jobless rate will fall even further in the months ahead.

The amount of money the average worker earns per hour, meanwhile, rose 0.3% to $27.24.

The increase in pay over the past 12 months slowed to 2.8% from 2.9%, but it’s widely expected to top 3% soon because of the growing competition for a shrinking pool of available workers.

What happened: The bulk of hiring in September was concentrated in the professional ranks, health care, construction and manufacturing.

White-collar firms added 54,000 job and health-care providers filled 26,000 positions. Builders hired 23,000 workers and manufacturers 18,000.

Employment fell among retailers, restaurants and hotels.

The slowdown in hiring in September may have been partly caused by Hurricane Florence, but the government said it could not be certain.

In any case, job creation earlier in the summer was much stronger than initially reported. Employment gains for August and July were revised up by a combined 87,000.

The U.S. has added an average of 208,000 jobs a month through the first nine months of 2018, above the 182,000 pace during the same nine-month period last year.

Most economists believe it’s just a matter of time before hiring slows sharply and they wonder if September is a hint of what’s to come. The economy is starting to run out of workers, they contend.

Big picture: The economy might not be great, but it’s been a long time since it’s been this good. And the biggest source of strength is the labor market.

Years of steady hiring have knocked unemployment back to levels last seen during the Clinton presidency. And layoffs are at the lowest levels in 50 years.

The ultra-low unemployment is now forcing businesses to offer better pay to filling a record number of job openings. That’s boosted the confidence of Americans to the highest level in 20 years and also given businesses more confidence to invest and hire even more workers.

The result: Growth in 2018 might top 3% for the first time in 13 years.

The biggest risks to the economy?

Rising wages and higher inflation are nudging the Federal Reserve to raise the cost of business and consumer loans. And some experts predict the burst of economic activity since the spring could fade next year as the jolt of adrenaline provided by the Trump tax cuts and increased federal spending fade.

What they are saying?: “Despite the hurricane-weakened headline rise, this was a strong report,” said chief economist Chris Low of FTN Financial.

“Overall, a strong report that will keep the Fed firmly on track to continue raising rates once a quarter, with the next hike likely to come in December,” said senior U.S. economist Michael Pearce of Capital Economics.

Market reaction:The Dow Jones Industrial Average DJIA, -0.68% and S&P 500 SPX, -0.55% traded lower in Friday trades. The Dow set a fresh record earlier this week.

The 10-year Treasury yield TMUBMUSD10Y, +1.37% stood at 3.23%, rising after the data. Yields have jumped to a seven-year high owing to strong economic growth and higher odds of another Fed rate hike soon.

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