US jobless rate down post-Katrina

The number of jobs in the 'goods-producing' sector have increased

A total of 56,000 new jobs were created in the US in October, as the effects of a series of hurricanes started to wane.

The US Labor Department also said that the unemployment rate fell to 5.0% from 5.1% in September.

But, allowing for the effects of Hurricanes Katrina and Rita in the Gulf Coast areas, the job market seemed slow in areas of the US not affected.

"Growth in the remainder of the country appeared to be below trend," Kathleen Utgoff of the Labor Department said.

She said this might have been a result of indirect effects of the storms, including increased fuel bills and blocked supply routes.

Wages 'ticking up'

But the number of new jobs created was well below expectations. Before the results were published, the consensus estimate of Wall Street analysts had predicted about 100,000 new jobs.

Unfortunately, the chances of a respite from the Fed's relentless programme of interest rate rises do not look very good Angus McCrone, CEBR

A total of 49,000 jobs were created in "goods-producing industries" in October, good news for the sector after it lost 13,000 posts in the previous month.

Meanwhile, average hourly earnings were up to $16.27 from $16.19 in September. It means average hourly pay rates are up 2.9% over the past year, the biggest year-on-year gain since July 2003.

And looking back to the previous month, there was some good news as the Labor Department revised down September's number of 35,000 lost jobs to just 8, 000.

"I don't think this is a bearish report because average hourly earnings are ticking up significantly," said Firas Askari, manager of foreign exchange trading for BMO Nesbitt in Toronto.

"That is obviously a direct driver of inflation."

'Tickle up worries'

Wage increases are a concern of the Federal Reserve, which fears rising pay packets could put inflationary pressures on the economy.

The Fed has raised US interest rates 12 times since mid-2004 - on Tuesday it increased them to 4%.

"Unfortunately, the chances of a respite from the Fed's relentless programme of interest rate rises do not look very good," said Angus McCrone, senior economist at the Centre for Economics and Business Research (CEBR).

"Today brought news of an eight-cent rise in average hourly earnings. This is well above the three-cent increase that was expected. It will tickle up Fed worries about a wage-price spiral."

However, on Thursday it was revealed that US business productivity - the amount of output per hour of work - soared during the third quarter, to its best performance in more than 12 months.

Rising productivity means workers can be paid more without increasing worries about inflationary pressures.