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U.S. employers hired at a solid clip in October, showing the job market remains strong even in the face of labor strikes and trade disputes. The economy added 128,000 jobs in October. Job creation in September and August was revised up by a net 95,000. And the jobless rate ticked up to 3.6% last month from 3.5% in September as more Americans entered the workforce.
Stronger for Longer
The U.S. labor market is nothing if not resilient. Nonfarm payrolls in October easily absorbed a strike at General Motors, an end to temporary Census jobs, global turbulence and domestic political uncertainty to add 128,000 jobs, well above expectations. The unemployment rate ticked up but largely for the right reason: 325,000 people entered the workforce. One soft spot for workers: Wage gains aren’t accelerating. Optimistically, that could be because employers are able to pull more and more Americans off the sidelines, increasing the supply of workers and limiting wage pressure. Pessimistically, it might reflect the quality of jobs being created. But the bottom line: Yes, the pace of hiring is slowing, but all signs suggest domestic employers are still going strong.
KEY THEMES
Jobs Report Justifies Fed’s Pause
Federal Reserve Chairman Jerome Powell signaled this week the central bank was done cutting interest rates unless it sees a serious slowdown in economic activity. Friday’s employment report justifies that pause for now, Nick Timiraos writes.
- The Fed cut its benchmark interest rate this week for the third time since July amid concerns that a slowdown in global growth and an increase in trade policy uncertainty would chill the U.S. economy.
- Mr. Powell indicated officials now want to step back and assess whether economic activity stabilizes near current levels or weakens further.
- The Fed will have one more employment report early next month to review before its final scheduled policy meeting of the year on Dec. 10-11. Before Friday’s report, investors had placed a roughly one-in-five probability of another rate cut this year. That fell to around one in eight after Friday’s report.
Participation Trophy
One of the brightest spots in Friday’s report: Prime-age participation and employment. The share of workers ages 25 to 54 either working or looking for a job rose to the highest level since 2009. The share that’s employed hasn’t been higher since 2001.
Another sign that the longest stretch of job creation on record is lifting Americans more broadly: The unemployment rate for black men over age 20 is at the lowest level since the Labor Department began counting that measure in 1972. The rate has now halved from 10.3% just five years ago.
Speed Bumps
October’s gains came despite a strike at General Motors and the end of of about 20,000 temporary Census jobs.
If you’re looking for weak spots, wage gains are moving sideways. Average hourly earnings were stuck at plus-3% for the second straight month, a bit below the level from just a few months earlier.
Another so-so sign: “Rates of involuntary part-time work and long-term unemployment did not decline in October, which means some job seekers aren’t benefiting from this tight labor market,” says Indeed Hiring Lab’s Nick Bunker.
WHAT ECONOMISTS ARE SAYING
“While it is important to note that the job market remains quite strong, with the unemployment remaining just above 50-year lows, the slowdown in job growth over the past three months is notable.” —Mike Fratantoni, MBA
“Unless and until the labor market starts to suffer from trade- and manufacturing-related turmoil, there is little reason to think that the U.S. economy is in danger of slipping into recession.” —Eric Winograd, AllianceBernstein
“Not only is the October employment report better than expected, it is also better than it looks.” —Richard Moody, Regions Financial
“The good and the bad news is that this labor market is still what we thought it was: Slowing, but growing steadily, providing benefits for more workers, but not all.” —Nick Bunker, Indeed Hiring Lab
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