The U.S. economy added 161,000 new jobs and the unemployment rate ticked down to 4.9 percent in October, the Bureau of Labor Statistics announced Friday in an overall encouraging jobs report released just days ahead of the presidential election.
October’s payroll job gains fell short of the expectations of private-sector forecasters, which were for 178,000 new jobs, but other aspects of Friday’s report, especially strong wage gains, signaled ongoing labor market resilience and will likely be enough to keep the Federal Reserve on track to resume tightening monetary policy next month as expected.
Job creation has tapered in 2016 as the ranks of the unemployed have thinned, but recently it has stayed strong enough to keep unemployment trending down. Federal Reserve economists reckon that the U.S. only needs 50,000 to 100,000 new jobs a month to keep up with population growth. Including upward revisions to the previous two months, job gains have averaged 176,000 a month for the past three months.
And details of Friday’s report suggested underlying strength.
Average hourly earnings rose by 2.8 percent annually, the strongest such wage growth since 2009 and a sign that labor markets are tightening enough to accelerate wage gains.
For “prime-age” workers, those between the ages of 25 and 54, employment rose to 78.2 percent of the population, a new post-recession high. That improvement came even as the labor force contracted slightly in the month. The slightly downtick is a blip in the trend in the past year of the low unemployment rate, hovering around 5 percent for a year now, drawing more people into the workforce. Labor force participation has increased by 2.6 million over the past 12 months, even amid the ongoing retirement of the Baby Boom generation.
Federal Reserve chairwoman Janet Yellen has expressed the hope that the current environment of a low unemployment rate and low inflation might allow for the economy to make further progress in bringing back workers who quit looking for jobs during the worst of the recession.
Rising employment does apppear to be lifting all boats. The U6 unemployment rate, a broad measure of underemployment that takes into account involuntary part-time workers and people only sporadically looking for work as well as the jobless, dropped from 9.7 percent to 9.5 percent, the lowest such rate since just after the bailout of the investment bank Bear Stearns in the spring of 2008.
Jed Kolko, chief economist for the jobs site Indeed, called the report “as good as an optimist dared hope for,” citing the wage growth acceleration and upward revisions to past months’ growth.
October’s job gains also likely would have been higher if not for Hurricane Matthew, the storm that battered the southeastern coast and caused mass evacuations in Florida, Georgia, and the Carolinas. Bank economists estimated that Matthew likely clipped 5,000 to 10,000 jobs from Friday’s gains.
The health care sector saw strong growth in October, adding 31,000 new jobs. Service industries and insurance also saw gains.
The fallout in the energy sector from the collapse of oil prices beginning in 2014 appears to have abated. Mining and logging jobs, the category that includes oil drillers and related businesses, only lost 2,000 jobs in October. That category has shed 228,000 jobs since September of 2014.
Friday’s payroll jobs numbers are adjusted for seasonal variation, and will be revised twice in upcoming months as the Census Bureau gets responses from more establishments.
