Connect with us

Hi, what are you looking for?


US economy smashes expectations to add 271,000 jobs in October

The US economy added 271,000 jobs in October, about 90,000 more than expected. The unemployment rate dropped to 5%.

The Federal Reserve is scheduled to meet in December to discuss raising interest rates for the first time since the 2008 recession. According to analysts, job gains of more than 150,000 on Friday would have been enough to keep a December rate hike on the table.

Friday’s job report exceeded expectations. Economists had expected non-farm payroll numbers to increase by 180,000, enough for the Fed to consider raising interest rates. The unemployment rate was expected to remain steady.

Prior to the release of the new numbers, Mark Zandi, chief economist at Moody’s analytics, predicted that job gains of 185,000 and job numbers from August and September would be revised up, causing the unemployment rate to decline to 5%.

The Department of Labor revised the August payroll to 153,000, up from 136,000. The September number, however, was revised down to 137,000 from 142,000. Over the past three months, 187,000 jobs have been added, on average, each month.

“The national economy is fast approaching full employment. Underlying job growth – abstracting from the monthly vagaries of the data – is close to 175,000 per month,” Zandi said.

“At this pace, if sustained, which seems likely, the economy will be at full employment by next summer. Pressure on the Fed to begin normalizing interest rates is also mounting as full employment approaches.”

Another bright spot in the jobs numbers released on Friday was the news that US wage growth is starting to accelerate. According to the report, hourly earnings have gone up by 2.5% in the last year, up from 2.2% last month.

Advertisement. Scroll to continue reading.

“Wages are the unfinished business of this recovery,” Chris Lu, US deputy labor secretary, said in September.

Gus Faucher, senior macroeconomist at stockbroker PNC, attributed the wage growth to a tighter labor market.

“Businesses are raising wages in response to the fact that it is tougher and tougher to find workers,” he said.

“When I go out and talk to people, I ask them: ‘Are you having difficulty recruiting workers?’ I always have people raising their hands. The labor market is tightening.

“We can argue about what a 5% unemployment rate means, but it’s a lot tighter now than it was even a year or so ago. If you want to find workers, you have to pay more. If anything, it’s going to pick up over the next year or so as the labor market continues to tighten.”

This was first of two jobs reports to be released by the US Department of Labor before the Fed meets.

“At this point, I see the US economy as performing well,” Janet Yellen, the Fed chair, told Congress on Wednesday. Yellen did note that while there has been a slowdown in job gains, the economy would “continue to grow at a pace that’s sufficient to generate further improvements in the labor market”.

She stressed that no decision had been made and that a December rate hike would still be on the table as the Federal open market committee continued to monitor data.

“This is a big piece of data as to what the Fed is looking for,” Scott Colyer, chief executive officer of Advisors Asset Management in Monument, Colorado, said about Friday’s job report on Thursday.

Advertisement. Scroll to continue reading.

“I think everybody wants them to move or not move. The month-to-month stuff is killing everybody.”

Atlanta Fed president Dennis Lockhart said this week that labor markets would continue to improve and that “the case for liftoff will continue to firm up”.

Not everyone is on board with a December rate hike. When Yellen appeared before Congress on Wednesday, a number of representatives questioned her on whether the risks of increasing the rate in December outweighed the benefits.

“The Federal Reserve should keep in mind the lackluster growth we’ve seen throughout 2015 and continue to let the economy recover,” said Elise Gould, senior economist at the left-leaning Economic Policy Institute.

“They should not raise interest rates until wages rise further and for a sustained period of time, and people on the edges of the economy get jobs.”

Gould pointed to the employment-to-population ratio, which at 59.3% has shown little movement over the past year, as a reason to hold off on raising interest rates. The labor participation rate remained at 62.4% – the lowest since 1977.

Faucher, the PNC macroeconomist, said: “The labor force numbers are bouncing around a lot. At this point, we are not likely to see much boost to the labor force participation rate.”

According to him, some of that is due to the retirement of the baby boomers.

“I don’t think we will be seeing the labor force participation rate rising much, if at all. I do think that people are feeling good about the labor market.”

Advertisement. Scroll to continue reading.


You May Also Like


An exclusive article form Orestis Karipis In the 1930’s and 1940’s acid was the weapon of deceived husbands and wives in the Western world...


Professing to be the lead in Thai relationship with over 1.5 million enrolled single people, Cupid Media’s ThaiCupid brings the one in every of...


Read more about switzerland women here. Swiss ladies and men are not reknown for being the most chatty, outgoing or spontaneous when meeting strangers...


In food, if there is one thing you can say without fear of contradiction, it is this: Britain loves burgers. The UK market is...

Copyright © 2020 All Rights Reserved