Labor market rebounds as employers add a strong 271,000 jobs in October

WASHINGTON — A burst of hiring last month accompanied by strong wage gains suggests that the U.S. labor market remains solid and increases the likelihood that the Federal Reserve will make its first interest rate hike in nearly a decade next month.

The Bureau of Labor Statistics said Friday that employers across a broad spectrum of industries added a net 271,000 new jobs in October. That is far more than most analysts’ forecast for about 180,000 jobs, and a sharp acceleration from revised payroll gains of 137,000 in September and 153,000 in August.

The nation’s unemployment rate inched down to 5 percent from 5.1 percent in September — with the labor force expanding, not shrinking as in some recent months. The latest jobless figure is the lowest since April 2008 and exactly half the rate at its peak during the Great Recession in October 2009.

Significantly, average hourly earnings rose a strong 9 cents in October from the prior month for a year-over-year gain of 2.5 percent, which is the highest since July 2009. Wage gains since then have been running at about 2 percent, but the latest increase may indicate that employers are finding they need to raise pay more in an increasingly tight labor market.

While hiring in manufacturing and the mining industry remained lackluster — reflecting the strong dollar, weakness abroad and low oil prices — the latest employment report showed sizable additions in business and professional services, retail, health care, leisure, as well as construction.

The strong overall hiring suggests that the late-summer slowdown was a bump in the road rather than a downshift in growth as the economy heads into the important holiday shopping season.

Consumers have been driving economic growth in the U.S., thanks to steady job gains, low debts helped by rock-bottom interest rates and relatively resilient housing and stock markets. New cars have been flying off dealer lots. And economists are looking to consumers to keep fueling the economy, now in its seventh year of growth after the Great Recession.

Friday’s report will boost the Fed’s confidence that the job market is continuing to improve — a precondition for the central bank to start lifting its benchmark short-term interest rate, which has been held near zero since late 2008. Fed Chair Janet L. Yellen said Wednesday that the economy is “performing well” and that a rate hike could come next month, but policymakers are closely monitoring conditions affecting the outlook for inflation as well as the labor market.

The Fed will see one more major jobs report early next month before officials assemble Dec. 15-16 for its last scheduled monetary policy meeting of the year.

(c)2015 Tribune Co.

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