Employment Posts Strong October Numbers
Total nonfarm payroll employment rose by 250,000 in October, while the unemployment rate remained unchanged at 3.7 percent, the lowest level since 1969, the Bureau of Labor Statistics reported Friday.
The report said job gains occurred in health care, manufacturing, construction and transportation and warehousing. Wages rose 3.1 percent, the strongest monthly growth since April 2009.
BLS revised down payroll employment for September from +134,000 to +118,000, and revised up August figures from +270,000 to +286,000, offsetting each other. After revisions, job gains have averaged 218,000 over the past three months.
The report said the number of unemployed persons was little changed at 6.1 million. Over the year, the unemployment rate and the number of unemployed persons declined by 0.4 percentage point and 449,000, respectively. The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 1.4 million in October and accounted for 22.5 percent of the unemployed.
BLS said the labor force participation rate increased by 0.2 percentage point to 62.9 percent in October but has shown little change over the year. The employment-population ratio edged up by 0.2 percentage point to 60.6 percent in October and has increased by 0.4 percentage point over the year.
“In a strong report overall, the big news in this morning’s Friday’s October jobs report was the annual change in wage growth exceeding 3 percent for the first time since April 2009,” said Joel Kan, Associate Vice President of Economic and Industry Forecasts with the Mortgage Bankers Association. “At 3.1 percent, the year-over-year increase in average hour earnings followed a similarly strong increase in the wages component of the ECI released earlier this week. This is a positive for the housing market, for which home price appreciation exceeding wage growth has been an issue in recent years.”
Jay Bryson, global economist with Wells Fargo Securities, Charlotte, N.C., noted the payroll jump was “stronger than most analysts had expected.”
“The strong rise in payrolls in October represents, at least in part, statistical payback for the hurricane-distorted weakness in employment in September,” Bryson said. “The trend of strong employment gains remains intact.”
BLS said the average workweek for all employees on private nonfarm payrolls increased by 0.1 hour to 34.5 hours in October. In manufacturing, the workweek edged down by 0.1 hour to 40.8 hours, and overtime was unchanged at 3.5 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls, at 33.7 hours, was unchanged over the month.
The report said average hourly earnings for all employees on private nonfarm payrolls rose by 5 cents to $27.30. Over the year, average hourly earnings have increased by 83 cents, or 3.1 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 7 cents to $22.89 in October.
“Rising wage growth and moderating home price growth will help ease some of the affordability issues that prospective home buyers have faced,” Kan said. “We are averaging 212,000 jobs per month in 2018 to date – one of the strongest years for job growth in recent history – and in combination with the low unemployment rate, this will continue to push wage growth higher.”
“Most analysts expect that the Federal Reserve will hike rates by another 25 basis points at its December [Federal Open Market Committee] meeting, and today’s strong labor market report reinforces that expectation,” Bryson said. Looking forward, we look for employment growth to remain generally strong, which should cause the unemployment rate to recede even further. Consequently, we look for the Fed to continue raising rates at a gradual pace into next year.”
