U.S. Economy Added 271000 Jobs In October, Beating Expectations

With revisions to the weak job gains in August and September, employment growth in those two months was 12,000 more than originally reported, and the average three-month job gain for August through October is 187,000. “It’s pretty clear that the Fed would be justified in hiking in December if the economy doesn’t hit another air pocket”, said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin. “It could provide a real boost to the economy if we get more wages in the hands of households”.

“We should see continuing strong demand for housing in the months ahead if today’s strong jobs report reflects a true return back to a strong growth trend we’ve seen over the last few years”, Realtor.com Chief Economist Jonathan Smoke said.

A Reuters poll of top bond dealers showed a growing number expected borrowing costs to go up next month, with 15 of 17 looking for a hike.

Fed policymakers have been closely watching the pace of job growth, the unemployment rate and other business indicators to determine when is the right time to adjust its key rate, at near zero percent for several years during the nation’s gradual recovery from the steepest recession since the Great Depression of the 1930s. It would be the central bank’s first increase since 2006.

The unemployment rate, which is derived from a separate Labor Department survey of households, is the lowest since April 2008. That 1.5 percent gain translates into annualized wage growth of 18 percent.

But, he said, there’s still slack remaining in the workforce, with more to come. The Standard & Poor’s 500 index lost five points, or 0.3 percent, to 2,095 and the Nasdaq composite rose five points, or 0.1 percent, to 5,132. The two-year Treasury jumped from a yield of 0.82 percent to as high as 0.92 percent after the jobs numbers were released. Over the past year, hourly earnings have increased 2.5 percent. The jobless rate is now at a level many Fed officials see as consistent with full employment.

Stocks had a mixed reaction Friday to the surprisingly strong October job report as investors adjusted to the prospect of higher interest rates as early as next month.

The US Fed’s chair Janet Yellen has said previously that she would only consider an interest rate rise once the jobs market had improved, and if the next set of figures – due in a month – are equally positive then economists say a rate rise is certain.

These numbers are considerably lower than was normal in past decades because the US population is becoming increasingly elderly.

Employers added a robust 271,000 jobs last month.

Apart from the headline job growth, the other signals from the October jobs report were encouraging. The college-level unemployment rate, which can serve as a proxy for professional employment, was unchanged month over month at 2.5%. Among the unemployed, 26.8 percent are out of work for more than six months, up from 26.6 percent last month.