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Friday, November 5, 1999 Published at 14:29 GMT

Business: The Economy

US wages steady despite jobs record

More people are in work than at any time snce January 1970

The US economy has received a boost ahead of a decision on interest rates, with figures showing the lowest jobless rate for 29 years but little sign of wage inflation.

The US unemployment rate fell to 4.1%, with 310,000 jobs created in October.

Average hourly earnings - which will be closely watched ahead of the Federal Reserve's rate-setting meeting on 16 November - rose just 0.1% last month, up 3.6% year-on-year.

Both sets of figures, compiled by the Department of Labor, were better than analysts had expected.

The US stock market initially leaped on the news, with the Dow Jones industrial average opening up 200 points higher, although it later pared these gains.

Inflation fears

Economists had forecast the unemployment rate to remain steady at 4.2% and wages to rise 0.3%.

The low level of pay increases may help calm fears about wage inflation putting pressure on the Fed to raise short-term interest rates.

The lower unemployment level is a further sign of the strength of the US job market, which has led to many analysts fearing wage inflation may impact on the overall inflation rate, neccesitating further rises in the interest rate.

This latest set of figures give further encouragement, following the publication of the quarterly employment cost index last month which showed the pay and benefits of US workers rose by a lower-than-expected 0.8%.

Analysts now say they believe the Fed's decision later this month will be a close call.

Fed chairman Alan Greenspan has made it clear he is keeping a close eye on the labour market for possible signs of inflationary pressures.

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