Employers resumed hiring at the fastest pace of the year in October, easing concerns that a global slowdown is weighing on the world’s largest economy. The Bureau of Labor Statistics reported 271,000 new positions last month, led by growth in the professional and business services, and education and health services sectors. The stellar jobs figure, along with recent remarks by members of the Federal Open Market Committee, tips the scale in favor of an interest rate hike prior to 2016.
Better-than-expected gains were nearly universal in last month’s job report. The largest improvement came in the professional and business services (78,000), and education and health services (57,000). Although these two sectors have been the primary contributors to payroll expansion since the recovery began, other sectors also exhibited strength last month. Builders have had difficulty filling positions, but managed to hire 31,000 workers in October. Retailers tacked on 43,800 spots and leisure and hospitality firms hired 41,000 workers.
Perhaps the most pivotal piece of data associated with last month’s establishment survey was the solid gain in wage growth. Year over year, average wages climbed 2.5 percent to $25.20 per hour. The increase provides further evidence that the labor market has tightened to a level that is encouraging competition among companies searching for workers. Low wage growth has been mentioned several times by the Fed as part of the impetus to keep the funds rate near the zero bound.
In the household survey, which provides an overview of unemployment, the headline figure declined 10 basis points to 5 percent, which is lowest level since April 2008. The rate for discouraged and part-time workers, along with traditional unemployment, fell 20 basis points to 9.8 percent. Strong job growth, tightening unemployment and higher wages are expected to give the Fed ample opportunity to raise the funds rate in December, though several additional data points will be released prior the next FOMC meeting.
Sources: HomeUnion® Research Services, Bureau of Labor Statistics,