WASHINGTON (AP) — U.S. hiring roared back in October after two weak months, with employers adding a robust 271,000 jobs, the most since December. The unemployment rate dipped to a fresh seven-year low of 5 percent.
The burst of hiring across a range of industries came as companies shrugged off slower overseas growth and a weak U.S manufacturing sector. Big job gains occurred in construction, health care and retail.
However, the labor force participation rate remained at a 38-year low at 62.4 percent. The Free Beacon explains:
There were 94,513,000 Americans 16 or older who did not participate in the labor force in October, which dropped from the 94,610,000 Americans who didn’t participate in September. These are individuals who did not have a job and did not actively seek one in the past four weeks.
The U.S. economy is rebounding strongly after a worrisome summer. Hiring flagged amid financial turmoil in China and faltering economies in Europe and many emerging markets. Yet American consumers have kept spending at a healthy pace, supporting strong job growth even as factory payrolls were flat last month and oil and gas drillers cut jobs.
The job gains are likely strong enough to persuade the Federal Reserve to lift short-term interest rates at its next meeting in mid-December.
The prospect of higher interest rates drove down financial markets. Futures on the Dow Jones industrial average fell 51 points in early trading.
Robust hiring also raised wages 9 cents to $25.20. That is 2.5 percent higher than 12 months ago, the largest year-over-year gain since July 2009.
That is comfortably above inflation, which was been flat in the past year.
“This is a fantastic jobs number at this point in the recovery, and we’re also finally seeing strong wage gains,” said Tara Sinclair, Chief Economist for job site Indeed. “This data tips the scales toward a rate hike in December, but more importantly is a sign that our economy may have more punch than we thought.”
Retailers added nearly 44,000 jobs, the most since last November, a sign they are preparing for strong sales over the winter holidays. Hotels and restaurants added 41,000 jobs.
Many higher-paying sectors also saw healthy gains, such as professional and business services, which includes lawyers, architects and engineers. It added 78,000 positions, the most in nearly a year. Those gains also included nearly 25,000 temporary jobs.
Any gain above roughly 150,000 was expected to keep Fed policymakers on track to raise interest rates from record lows at their Dec. 15-16 meeting. Chair Janet Yellen and other leading Fed officials have said that the economy is generally healthy and that the December meeting is a “live possibility” for a rate hike.
Strong hiring should continue to reduce the unemployment rate over time. The economy typically needs only about 100,000 jobs a month to keep the unemployment rate from rising. That figure has fallen in recent years as the aging population and increasing retirements by baby boomers have slowed the growth of the U.S. workforce.
Other recent data also suggest that global turmoil and manufacturing’s rough patch haven’t slowed economic growth. Consumers, the biggest driver of the U.S. economy, are still spending at a healthy clip, supported by lower gas prices and a recovery in the stock market.
The economy grew at just a 1.5 percent annual rate in the July-September quarter. The slowdown occurred mostly because businesses cut back on their stockpiles, and exports weakened.
Still, Americans boosted their spending at a healthy 3.2 percent annual pace, down just a few tenths from the second quarter. Solid consumer demand has encouraged many services firms, which make up roughly 80 percent of the economy, to step up hiring.
Overall, services firms expanded last month at the fastest pace in three months. That’s in sharp contrast to the ISM’s survey of manufacturing firms, which barely grew in October.