WASHINGTON — The U.S. unemployment rate fell to 3.7 percent in September — the lowest level since December 1969 — signaling how the longest streak of hiring on record has put millions of Americans back to work.
Employers added just 134,000 jobs last month, the fewest in a year, the Labor Department said Friday. But that figure was likely depressed by the impact of Hurricane Florence.
That storm struck North and South Carolina in mid-September and closed thousands of businesses. A category that includes restaurants, hotels and casinos lost jobs for the first time since last September, when Hurricane Harvey exerted a similar effect.
In recent months, though, healthy consumer and business spending has been fueling brisk economic growth and emboldening employers to continue hiring. Americans are confident about the economic outlook, buoyed by the job gains and signs of higher pay. The September gain extended an 8½-year streak of monthly job growth.
What's more, the government on Friday revised sharply up its estimate of hiring for July and August by 87,000 jobs. So far this year, monthly job growth has averaged 208,000, up from a pace of 182,000 for all of last year.
"The acceleration in job gains this year is extraordinary in an environment where firms are having great difficulty finding qualified candidates," said Stephen Stanley, chief economist at Amherst Pierpont Securities.
Average hourly pay rose 2.8 percent from a year earlier, a moderate gain and one tick below the year-over-year increase in August. Many economists expect pay growth to accelerate in coming months. With unemployment so low, companies are facing intense pressure to raise pay to land workers. Amazon responded this week by raising its minimum wage to $15 an hour.
Financial markets were down sharply in late-morning trading. Investors have grown concerned about higher interest rates and the impact they might have on the economy and the stock market.
Friday's jobs report will likely keep the Federal Reserve on track to raise short-term interest rates, economists said, with another rate hike expected at its meeting in December.
The Fed's hikes might be starting to bite. Borrowing costs for businesses and consumers are rising. Pointing to the economy's health, the Fed last week raised its benchmark short-term rate and predicted that it would continue to tighten credit into 2020 to manage growth and inflation. Over time, higher borrowing costs make auto loans, mortgages and corporate debt more expensive and can eventually slow the economy.