The Labor Department released its hiring and unemployment figures for October on Friday morning, providing the latest snapshot of the U.S. economy.
— 250,000 jobs were added last month. Wall Street analysts had expected an increase of about 195,000.
— The unemployment rate was 3.7 percent. The figure for September was also 3.7 percent, the lowest since 1969.
— Average earnings rose by 0.2 percent and are up 3.1 percent over the past year.
— 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 a month earlier.
Friday’s report, the last official economic reading before Americans vote Tuesday, offered another reminder of the labor market’s persistent strength.
“The underlying fundamentals of the labor market are still really bright, it’s really the strongest part of the broader economy at the moment,” said Michelle Girard, chief U.S. economist at NatWest Markets.
The economy has historically not played an outsize role in midterm elections, and this political season, border control, health care and Brett Kavanaugh’s nomination to the Supreme Court have gobbled up airtime. Still, “jobs and the economy” was cited more frequently than other issues as the most important in a survey conducted in early October for The New York Times by the online research platform SurveyMonkey.
October marked the 97th consecutive month of job growth, extending an already record-making streak. Average monthly payroll increases have floated above the 200,000 mark. Last week, the government estimated that the economy grew at a hearty annualized rate of 3.5 percent in the third quarter. Confidence remains high among consumers and business leaders.
The report also offered evidence that sidelined workers are not only feeling optimistic about their job prospects but are actually finding work, which is why the jobless rate did not dip despite the big payroll gains.
Wages jumped year over year partly because there was an unusual drop in wages in October last year after Hurricane Harvey. But Girard pointed out that even if the figure was somewhat inflated, “there is an upward trend and evidence in the wage numbers which suggest we’re finally seeing some pickup in wage growth.”
Girard said the increase should not prompt broader concerns about inflation for policymakers at the Federal Reserve. “I don’t think it’s something the Fed should worry about,” she said. “Productivity growth is picking up, and workers should earn more. It doesn’t mean companies have to pass on higher wage costs to consumers. They can afford to pay them more.”
An Eye on Wages
With the jobless rate at record lows, sluggish wage growth has been a continuing concern. Although the unemployment rate has consistently surfed below the levels reached in 2000, at the height of that expansion, wages have been growing at significantly slower rates.
“We’re moving in the right direction,” said Scott Anderson, chief economist at Bank of the West. But after inflation is taken into account, real wages are creeping along at a very slow pace.
“They’re still trailing real consumer spending,” Anderson said. “That’s a problem as we move into the fourth quarter; the pickup in wage growth isn’t really enough to keep up with the spending pace we’ve been at over the past six months.”
Consumer spending, which accounts for roughly 70 percent of economic output, was especially vigorous in the second and third quarters.
Ted Franke, a sales representative for a beer, wine and liquor distributor in Louisville, Kentucky, said employees at his company got twice their usual raise this year and received their maximum bonuses. His customers, mostly small grocery and convenience stores, are ordering more alcohol, which Franke said he took as a sign of a strong local economy. And while he isn’t looking for a new job, he said it helped his confidence to know he could find another position.
Still, Franke, 37, isn’t rushing to spend the extra money in his paycheck. Instead, he is paying down debt and contributing more to his 401(k) plan.
“I’m not really going out and buying more stuff,” he said.
Coming Off the Bench
Since the recession ended, analysts have struggled to understand how many more potential workers are out there. Before the financial crisis, more than 66 percent of the population 16 or older was working or looking for a job. In recent years, that rate has rarely risen above 63 percent.
Many of those workers will never rejoin the labor force — some have reached retirement age, others have seen their skills lose value, and a number are too disabled to work. Economists have had a spirited debate over how many more people could be lured back to the labor market. The relatively languid pace of wage growth could be evidence that there are still people on the sidelines who would be willing to take jobs if it seemed worthwhile.
So far this year, the labor force has been growing by roughly 70,000 people a month — way below the average hiring figures. Help is not coming from abroad: The number of immigrant visas issued by the government has declined for two years in a row.
“The underlying fundamental drivers of the economy — and the labor market is an important one — are strong,” said Scott Clemons, chief investment strategist at Brown Brothers Harriman. “What’s so impressive to me is there have been more jobs than workers every month since March of this year.” Openings exceeded 7.1 million, according to the government’s most recent count.
Employers say they are on the hunt for workers. “I speak to probably a thousand businesspeople a month,” said Rick Lazio, a former Republican congressman who is now a senior vice president at Alliantgroup, a tax-credit consulting firm. Midsize manufacturers are turning down lots of business, he said, “because they can’t find the people and they can’t get the equipment fast enough.”
Analysts cautioned that the hurricanes that hit the Southeast this fall could be distorting underlying trends in the labor market. Hurricane Florence contributed to the weakness of September’s payroll growth. That storm affected 1.7 million people, and employment fell by about 39,000 in North Carolina and South Carolina. In October came Hurricane Michael, which made landfall in Florida. In that state and Georgia, jobless claims rose by 10,000. October’s figures will be revised up or down twice more, and September’s once more. This month’s revisions to August and September’s payrolls offset each other, so there was no net change.