Job creation rebounds sharply; unemployment rate falls to 4.1%.
The jobs market got back on track in October, as the impact of a hurricane-disrupted September faded and job creation rebounded sharply.
The unemployment rate continued its steady descent in October, falling to 4.1% -- its lowest level in a generation and reaching a level last seen in 2000.
Nonfarm payrolls increased by 261,000 in October, falling short of economist expectations for 300,000 or more. However, September’s previously reported drop of 33,000 was revised higher to a modest gain of 18,000 – a positive swing of 51,000 that effectively accounted for that difference.
As the pool of available labor dries up and the competition for workers heats up, there have been some indications that wage pressures may be building, although that wasn’t apparent in today’s report. Average hourly earnings dropped by a penny last month, but remain up about 2.4 percent over the past year. Nonetheless, broader measures of wages still suggest that wage gains are likely to pick up.
The bottom line is that the weak September employment report was widely believed to be an aberration in the otherwise positive uptrend in job creation, and today’s report confirms it.
More broadly, coupled with the recent report on GDP, the broader picture on the economy is a good one, colored by strong labor market conditions, a confident consumer sector, and positive business conditions, while inflation remains very much in check.
All of this sets up the Fed to raise rates another quarter point at its December meeting, and for policymakers to continue down the forecasted path of gradual renormalization.
In short, the economy remains on track.
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