The government released its latest job report on Friday, Nov. 6, and by all accounts, the report is the best of the year so far. A lively hiring pace, climbing wages and falling unemployment all made for an October that defied economists’ restrained expectations. The financial sector in particular has begun to shrug off a temporary lull in hiring.
There was plenty of noise leading up to the release of the Bureau of Labor Statistic’s Employment Situation Summary. In early November, the chairwoman of the Federal Reserve, Janet Yellen, told a panel on Capitol Hill that the possibility of raising interest rates in December was a very real one, though she did so in a way which left the Open Market Committee plenty of room to maneuver on the issue. Their decision was expected to depend heavily on the health of U.S. employment, and with the jobs report such a robust success, a small rate increase seems very likely.
Jobs gains well above expectations
The economy added 271,000 jobs in October, according to the BLS. The Wall Street Journal reported that the figure is not only the highest recorded this year, but a significant improvement on the 183,000 economists expected. Economists had tempered their forecasts after back-to-back lackluster months in August and September, when 153,000 and 142,000 jobs were gained respectively. But October broke any residual malaise. It was the 61st consecutive month of positive job growth, a stretch that hasn’t been seen since the U.S. began to fight its way out of the Depression in 1939.
As jobs increased, the unemployment rate fell slightly to 5 percent, down from 5.1 percent in September. The rate is right about what the Fed would typically consider full employment. Unemployment hasn’t been this low since April 2008. Broader scales for measuring unemployment, which take into account people looking for full-time work but who can only find part-time positions, stand at a seven-year low of 9.8 percent. Part of the reason for the dip in unemployment is labor force participation, which has hovered at about 62 percent for months as baby-boomers retire and some discouraged workers quit looking for jobs.
Average hourly earnings also increased in October. They were up 2.5 percent, to $25.20, which was comfortably above the 2 percent average of the economic recovery. Ian Shepherdson, Pantheon Macroeconomics’ chief economist, told the New York Times that there was finally “a payroll report which makes sense” and “is consistent with all the advance indicators.” The newspaper quoted Shepherdson as stating that, discounting any unforeseen circumstances this month, “rates are going to rise in December.”
Finance industry stays steady
In the glow of impressive employment figures, hiring in the financial sector remained steady – if somewhat unimpressive – in October. Like the manufacturing industry and government, the financial activities sector showed little change from September. About 5,000 positions were added to the industry, including insurance jobs and real estate jobs. That is one of the smaller gains recorded this year, considering the 14,000 jobs added in August, but it is an improvement on the net gain of about zero seen in September. After a lull, it seems hiring is back on the upswing.
“Some financial employers have been scooping up talent at an incredible pace.”
The Times reported on Friday that some financial employers have been scooping up talent at an incredible pace. Ernst & Young, for example, began hiring the first of a planned 17,000 new employees in July. Since then, the firm has already hired 2,500 consultants and accountants. Almost every position at Ernst & Young and companies like it requires a college degree. About 10,000 of the company’s future employees will be recent college graduates, indicating the incredible competition for high-level talent that is currently raging in the industry.