US job growth jumps; annual wage gain largest since 2009

Donald Trump

The Dow Jones Industrial Average was off about 200 points, or 0.8%, at 25,193 in early afternoon after rising initially following the strong jobs news, which featured a 250,000 rise in nonfarm payrolls last month, better than 50,000 above economists' consensus guesses.

Employers shook off a September slowdown to add a robust 250,000 jobs to their payrolls in October, the Labor Department said Friday.

The number of people working or looking for a job increased by 711,000, nudging the labor force participation rate up to 62.9 percent, from 62.7 percent in September.

"As long as job growth is steady, the jobless rate is low, and wages continue to edge higher, as long as we continue to keep climbing, that's the basic support that you need for the consumer", said Jennifer Lee, senior economist at Bank of Montreal in Toronto.

The U.S. economy is in its 10th year of expansion, the second-longest such period on record, and October marked the 100th straight month of hiring, a record streak.

Trump and Republican candidates painted the jobs report as further proof of an economic boom, but many independent economists warn that growth has probably peaked and that it is likely there will be a slowdown, especially if trade tensions continue to escalate. Along with the county, the state and federal rate also has decreased since past year.

William Stoller, chairman and chief executive of Express Employment Professionals, which is based in Oklahoma City, said pay in light industrial and administrative jobs, for example, had climbed to $14.50 to $15.50 an hour, from roughly $13.60 a year ago. And it's unlikely to change the Federal Reserve's strategy of gradually increasing interest rates.

"The risk in 2019 is that the Fed will increase the pace of rate hikes", said Joe Brusuelas, chief economist at RSM in NY.

According to the Labor Department, healthcare added 36,000 jobs, manufacturing added 32,000 jobs and construction added 30,000 jobs. Still, October's outsize gain might have reflected, in part, a rebound from September, when Hurricane Florence depressed job growth. People are eager to enter or re-enter the labor force and the pace of hiring remains strong, while wages are growing, meaning more money in the pockets of hardworking Americans. Construction expanded by 30,000 positions, almost half of which focus on residential homes.

Some advocates, such as the left-leaning Economic Policy Institute, believe interest rates should remain relatively low until nominal wage growth reaches the 3.5% to 4% range at which inflation might start to rise more quickly. Retail payrolls rose by only 2,400, likely restrained by layoffs related to Steinhoff's Mattress Firm bankruptcy as well as some store closures by Sears Holdings Corp.

Americans boosted their spending by the most in almost four years in the July-September quarter.

A measure of compensation that includes benefits and covers all workers, including government employees, rose 2.8 percent in the third quarter from a year earlier, the Labor Department report said.

Manufacturing output and hiring remain healthy, according to a survey by a private trade association, although increased tariffs have raised factory costs. That trend, in turn, can accelerate inflation.

Further, the labor participation rate has increased. The personal consumption expenditures price index excluding the volatile food and energy components, which is the Fed's preferred inflation measure, has increased by 2.0 per cent for five straight months.

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