Today’s jobs report from the Bureau of Labor Statistics solidly beat expectations. Many observers predicted small employment gains or even losses for the job market, but instead the report showed that the economy added 128,000 jobs to payrolls, and revised figures from the prior two months up by 95,000. On average, the economy has now added 167,000 jobs per month this year.
Service-sector hiring remains strong, even as production-sector hiring falters
The relatively volatile goods-producing sector is adding far fewer jobs than it did last year, amid slowing business investment and continued uncertainty surrounding trade policy. But weakness in manufacturing does not appear to be spilling over into the service sector.
The industries with the largest job gains in October were leisure and hospitality (+61,000 jobs) and healthcare and social assistance (+34,000). Even retail did well against the odds, adding almost 13,000 jobs over the last two months following seven months of decline.
Manufacturing lost 36,000 jobs, but would have added jobs in the absence of the General Motors strike, which shaved about 48,000 off payrolls. So even in manufacturing, there are signs that the labor market may be improving, rather than heading towards a recession.
Wage growth remains stable
Rather than continuing its slide, growth in hourly wages was revised upwards for September to 3.0% and held steady in October. With unemployment near its 50-year low at 3.6%, employers will likely continue to feel pressure to raise wages to attract and retain talent.
Participation continues to rise
The most encouraging news in the jobs report is that the prime-age employment-to-population ratio continued to rise, reaching 80.3% in October. That suggests the U.S. economy is still not at full employment and there is still room for further growth.
As we head into holiday season, the labor market may do better yet. Consumers have the wind at their backs. The cost of debt is low and wages are rising (even if not quite as quickly as might be expected). Inflation is low, and stocks are high. Mortgage rates are a percentage point lower than they were at this time last year, and new mortgage originations are soaring. A strong season for holiday shoppers and home buyers could raise job growth across the economy and close out the year on a strong note.
