Last month’s rise in wages, which have been nearly stagnant despite a tightening labour market, lifted the year-on-year reading to 2.5 per cent. That was the biggest increase since July 2009 and could give Fed officials confidence that inflation will gradually move towards their 2 per cent target.
The solid report added to strong services sector and automobile sales data in painting an upbeat picture of the economy at the start of the fourth quarter.
The unemployment rate subsequently fell to a seven-year low of 5.0% in October, matching economist estimates.
The October job gain of 271,000 topped all expectations and “makes it pretty likely the Fed will raise rates in December”, said Priscilla Hancock, a global fixed income strategist for J.P. Morgan Asset Management. Fed Chair Janet Yellen told the House Financial Services Committee Wednesday an increase is a “live possibility”.
Any gain above roughly 150,000 was expected to keep Fed policymakers on track to raise interest rates from record lows at their December 15-16 meeting, though the Fed will have one more jobs report, to digest before then.
A perhaps more meaningful number is the labor force participation rate. That lowered the unemployment rate to 5 percent, half the rate we saw six years ago at the height of the Great Recession.
Economists surveyed by Bloomberg estimated 182,000 new jobs were created, according to their median forecast. However, as the New York Times notes, there were still job losses in the manufacturing sector, along with mining and logging, where 100,000 jobs have been lost this year.
Among Latino males over 20 years old, the employment rate is 5.1 percent, significantly lower than the Latina rate of 6.4 percent. But that figure was likely unsustainable, many analysts say, given that the economy grew just 2 percent in the past 12 months. Adding to this certainty is the minutes from the Federal Reserve’s October meeting, which include a rate hike agenda in the bank’s December policy meeting.
The yield on the 10-year Treasury bond surged after the report, jumping as high 2.34% from 2.23% late Thursday.
Last month, there were 24,928,000 foreign-born workers employed, which means that the number has increased by 192,000 since then.
The industries that showed the most gains were “professional and business services, healthcare, retail trade, food services and drinking places, and construction”, according to the report.
In addition to jobs, The Wall Street Journal also reports that the dollar is up 1 percent against the yen, euro, and other foreign currencies.