Job growth sprang back in October after being clipped by hurricanes the month before, the Bureau of Labor Statistics employment report showed Friday, as the economy added 261,000 new jobs and unemployment dropped to 4.1 percent.
Economists surveyed by Bloomberg had expected payrolls to surge by 325,000 as workers returned to storm-struck businesses. Growth fell short of that number, but the strongest gains came in the sectors most affected by weather, such as restaurants and bars.
The report vindicated economists’ belief that September’s weak report, which originally showed 33,000 lost jobs, reflected the one-time impact of Hurricanes Harvey and Irma rather than a broader economic slowdown.
In fact, September’s jobs number was revised up to 18,000 Friday, meaning that the nation’s streak of positive job growth is still intact at over 7 years.
“Beneath the surface of the ups and downs in the monthly hiring numbers, the U.S. economy is faring well by most measures,” said Bankrate.com senior economic analyst Mark Hamrick.
Only about 100,000 jobs per month are needed to keep unemployment from rising, Federal Reserve chairwoman Janet Yellen said in September. Average job growth over the past three months has easily eclipsed that mark at 162,000, counting revisions to August and September, even despite the hurricanes’ impact.
That pace of job growth indicates that President Trump can expect the jobs recovery to roll on for the near future absent any major shocks to the economy. Yellen, too, will be reassured that her current plans to slowly tighten monetary policy are warranted. She is now responsible only for the next few months, as Trump announced Thursday that he planned to replace her in February with current Fed governor Jerome Powell.
Investors expect Yellen to carry out one more increase in the Fed’s target interest rate before she leaves, in December. Friday’s jobs report didn’t change that expectation, bond market prices indicated.
Friday’s report also contained some encouraging news from the household survey. The unemployment rate is the lowest it’s been since December of 2000.
Broader underemployment, as measured by the “U6” rate that includes not only jobless people but also those forced into part-time work or sporadic work, fell to 7.9 percent, the lowest since July of 2001.
The labor force participation rate fell in the month to 62.7, but overall hasn’t significantly budged since the fall of 2013.
That stability is a big change since the days of the recession, when participation was plummeting. Then, falling labor force participation was thought to be driven be some combination of ongoing demographic changes — such as the retirement of the Baby Boomers — and the underlying weakness of the economy, which led some people to quit the job hunt altogether and fall out of the official calculation of the workforce.
Baby Boomers are still retiring in droves each month, but now it appears that the jobs market is strong enough to retain workers, rather than driving them toward the exits.
On the other hand, wage growth actually slowed in October, to 2.4 percent annually. So far, wage gains have not accelerated in the way that economists would have expected in light of falling unemployment. The failure of stronger wage growth to materialize could indicate that the jobs recovery can still go further.
