Figures released by the U.S Department of Labor, shows that the unemployment rate in U.S fell to 4.4% in the month of October, hitting its lowest level since May 2001. The current figures indicate that the fundamentals of the U.S economy is still strong, in spite of the slow down triggered by falling housing demand and increasing trade deficit. 92, 000 new jobs were added in the month of October, a modest figure when compared to 156,000 jobs on an average, added in each of the past three months. The unemployment rate has hovered around the 4.5% mark throughout this year, confirming that the slow down in the manufacturing and the housing sector, have not spilled over to the broader economy.
However, a few experts believe that the strong growth in the job market could eventually fan inflation, as employers would have to offer more wages to attract worker. A report released earlier this week showed that the productivity gains are not improving, despite of the raise in wages. This may ultimately affect the profitability of companies, due to higher labor costs. Sectors like construction, manufacturing and retailing cut thousand of jobs in the month of October, but these job losses were negated by hiring in sectors like education, health care, government, professional and business services.