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US adds 250,000 jobs in October; unemployment rate steady
WASHINGTON, Nov 3, 2018 (BSS/AFP) – The US economic engine delivered
another jolt of good news as Republicans battle to maintain control of
Congress in next week’s midterm elections, churning out jobs and giving
workers a fat pay bump, government data showed Friday.
The economy brushed past Hurricane Michael, adding 250,000 net new
positions in October and handily overshooting forecasts, while salaries rose
at the fastest pace in nearly a decade, the Labor Department said.
The unemployment rate held steady at 3.7 percent, a 48-year low, as more
workers entered the labor force.
The robust economy has been a comfort to Republicans and President Donald
Trump, who face a potential backlash from voters in Tuesday’s midterms. Polls
show Democrats stand a good chance of retaking the House of Representatives,
providing a greater check on Trump’s agenda.
“These are incredible numbers,” Trump said of the employment data on
Twitter. “Keep it going. Vote Republican.”
The result was something of a surprise as some economists had expected the
hurricane that made landfall on the Florida panhandle in the middle of the
employment survey week to depress reports of hiring and worker pay.
Instead, officials said the storm, which disrupted business and life for
millions, produced “no discernable effect” on the estimates.
October also marked the second month in a row that a hurricane had landed
in the middle of the survey — meaning the figures could be subject to extra
volatility, Ian Shepherdson of Pantheon Macroeconomics said.
Other data suggest hiring has indeed gathered pace, “but we won’t know if
that’s really happening until we have another couple months’ data,” he said
in a client note.
The jobs data showed companies kept right on hiring in healthcare,
manufacturing, construction, transportation and warehousing, despite
continued reports of a shortage of skilled labor.
But perhaps more significant, average hourly earnings, a closely-watched
measure of worker pay, rose 0.2 percent from September, putting wages 3.1
percent above the year-ago level — the fastest gain since April 2009.
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Sluggish worker pay gains despite the healthy jobs market had baffled
economists, and the increase now is well above the 2.3 percent pace of
consumer inflation.
– Supporting the Fed hawks –
Still, the rosy number benefited from a favorable comparison to October
2017, when many low-wage employees returned to work after being sideline by
Hurricane Maria, bringing the average of hourly earnings back down,
Shepherdson said.
And Diane Swonk of Grant Thornton noted that while wages are rising,
benefits have not recovered, despite comments from employers that they are
beefing up perks to attract and retain workers.
“Flexibility and ping-pong tables are not the same as permanent benefits
such as health care, 401(k)s and childcare,” Swonk said in a research note.
The transportation equipment sector added 21,000 workers, within which the
key auto industry accounted for 6,800 positions.
In another dose of good news, the American workforce grew by 711,000
people, lifting the labor force participation rate 0.2 percentage points to
62.9 percent, after holding stubbornly stable through the economic recovery.
The share of the population in the workforce also rose 0.2 to 60.6
percent.
The Federal Reserve is not expected to raise interest rates when it meets
to consider monetary policy next week, but the latest jobs report is likely
solidify the case for the rate hike expected in December.
Trump has expressed outrage at the Fed’s current tightening cycle, after
three hikes this year.
But with unemployment flirting with historic lows and the economy juiced
by tax cuts, stimulus and steady job creation, economists say policymakers
will feel they have little choice but to continue raising rates to stave off
inflation and prevent the economy from overheating.
And central bankers have made clear they expected to continue to gradually
raise the benchmark lending rate for some time, including an expected three
increases next year.
Oxford Economics said higher wages could spur inflation concerns among Fed
policymakers.
“We think it is too early to sound the alarm as wage growth is expected to
hover around three percent in the next few months,” the firm said in a
research note.
“Faster wage growth along with a remarkably strong employment report in
October will certainly lend some support to the hawks.”
Wall Street opened higher after the numbers were released but closed down
sharply as investors grew skeptical that a speedy resolution to the US-China
trade dispute was likely.
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