US unemployment rate falls to 5pct

The US Bureau of Labor Statistics released its October payroll data on Friday, revealing that total nonfarm payroll employment increased by 271,000 in October.

So if you are someone who has only smidgen of brain power you might think that something marvelous happened on October 1 that suddenly sent employers on a hiring binge.

The unemployment rate dropped to 5 percent in October, which is the lowest it has been since prior to the Great Recession.

The job growth was led by health care (44,900), retail (43,800), restaurants (42,000), construction (31,000), and temp help (24,500).

The Fed has done what it can to prime global markets for the possibility of a rise in short- term interest rates next month – the first such increase in nine years.

But that didn’t happen in the ’90s and it hasn’t happened recently, either.

Whether those numbers will be enough to get the Federal Reserve Board to raise the all-important benchmark interest rate should prompt at least two beers worth of debate if the prognosticating economists go out for happy hour after work.

Even before Friday’s report, expectations for a Fed rate increase in December were building. Additionally, average hourly earnings in the private sector rose in October by 9 cents to $25.20, up about 2.5 percent from this time a year ago.

These numbers are considerably lower than was normal in past decades because the US population is becoming increasingly elderly, and the baby boom generation is now retiring in droves, slowing growth in the workforce.

The number of jobs added in October beat analysts’ expectations of 180,000 by about 50 percent.

This video includes images from Getty Images.

“It’s a very positive report”, JJ Kinahan, chief strategist for TD Ameritrade, said.

The number of people stuck in part-time jobs who would prefer to work full time has plunged 18 percent in the past year.

A perhaps more meaningful number is the labor force participation rate.

“Another blowout month as good as October is also a long shot, so the Federal Reserve will look at smoother averages rather than individual months, and will also have the November report before their next meeting”, he wrote in a statement.

“This data tips the scales toward a rate hike in December but more importantly is a sign that our economy may have more punch than we thought”, said Tara Sinclair, chief economist for job site Indeed.com. Last month’s rise in wages, which have been nearly stagnant despite a tightening labor market, lifted the year-on-year reading to 2.5 percent. Government payrolls increased 3,000 last month. He said what might stay the Fed’s hand would be a poor jobs report next month or the return of “significant market turmoil driven by worldwide risks”.

The unemployment rate, which is derived from a separate Labor Department survey of households, is the lowest since April 2008.

The job market boomed in October.

September is one of those months when phantom jobs are removed from the count, so there was no way that month’s figures were going to be impressive. That compares to an average monthly gain of 230,000 for the last three months, according to the BLS.