The economy extended its run of strong job creation in October, adding 250,000 jobs during the month – easily exceeding consensus expectations of about 200,000. Revisions to previous monthly results shifted the results between September and August, but had no net effect on the cumulative numbers.
Through ten months, the economy is on a pace for job creation to top 2.5 million in 2018, which (if that pace holds) would make it the third best year for job creation in the current expansion.
Unemployment held steady at 3.7%, matching the lowest jobless rate in nearly a half century.
Despite the tightness in the labor market, average hourly earnings rose by a tepid 0.2% in the past month, although the increase of 3.1% over the past twelve months marks the first time that wage growth has reached that threshold in nearly a decade. Given the increasing scarcity of unemployed skilled workers, the competition for workers continues to intensify. With the economy growing at a strong pace, the demand for workers is unlikely to abate any time soon. Increasingly, the difficulty in identifying and hiring skilled workers is forcing starting wages higher, while also creating a greater need for on-the-job training.
Tight conditions also continue to bring people back into the workforce. Labor force participation increased by 0.2% to 62.9% in October, as nearly 700,000 people joined the ranks of those either employed or actively looking for a job.
Strong labor market conditions remain one key component to the virtuous phase of the cycle that the economy is currently in. Strong growth is perpetuating the demand for workers, strengthening household financial circumstances, and emboldening consumers who continue to spend, providing the fuel for the economy to continue to grow. Certainly, recent softness in housing shouldn’t be overlooked as both rising home prices, a lack of supply in some regions, and rising interest rates have dampened the market. Nonetheless, the overall strength of the economy and job market conditions have not been lost on consumers, who stoic, resilient, and generally upbeat.
Despite a range of uncertainties, one point is clear: the job market is doing remarkably well, particularly this late in the expansion. This report adds yet another data point to a narrative that has been positive for the labor market this year. Little seems to stand in the way of the economy finishing 2018 out on solid footing.
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