A moderately upbeat October jobs report suggests the economic expansion continues to grind ahead and the labor market continues to tighten. The October gains in jobs and wages suggest the economy is maintaining positive momentum in the early part of the fourth quarter.
Accelerating wage gains (up 0.4 percent for the month and 2.8 percent over 12 months) on top of a good pace of jobs growth should provide support for further increases in consumer spending heading into the holiday shopping period.
Generally favorable data in this report and other economic reports make a December rate increase probable. However, the Fed is likely to continue on a path of very gradual rate increases in the future.
The October employment report showed moderate strength, with the economy adding 161,000 jobs for the month; 142,000 of those were from the private sector. The three-month average stands at 176,000 jobs per month, while the 12-month average is 196,000.
All of the increase in private payrolls came from private services (+142,000), led by education & halth care (+52,000), and professional & business services (+43,000).
Retailing jobs declined by 1,000 after adding 22,000 in September. Financial employment rose by 14,000, and leisure and hospitality added 10,000.
Goods producing industries were unchanged on balance, with construction up 11,000, manufacturing down 9,000, and mining down 2,000.
Wages were up 0.4 percent for the month, and 2.8 percent over the past 12 months.
The length of the average workweek was unchanged at 34.4 hours.
When hours are combined with payroll gains and wages, the index of aggregate weekly payrolls, a proxy for take-home pay, rose a strong 0.5 percent for October, and is up 4.4 percent over the past 12 months – good news for consumer spending.
The unemployment rate ticked down to 4.9 percent as the participation rate ticked down to 62.8 from 62.9 percent in September.
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