October jobs report shows signs of a steady labor market

October jobs report

The October jobs report is in  – and it’s not what people were expecting. About 160,000 jobs were added to the U.S. economy in October, fewer than the anticipated 175,000. Although the jobs number missed its mark, the number continued the record 73-month streak for total job growth. Other factors including wage growth and labor participation rate also showed signs of a steady economy.

Over the month wages grew at the fastest pace since the financial crisis with hourly earnings rising 2.8% year-on-year and 0.4% month-on-month. The original forecast anticipated only 0.3% month-on-month growth. Strong wage growth paired with solid job gains could indicate a December interest rate rise by the Fed, as well as increased holiday consumer spending.

Labor force participation rate, or the number of Americans currently employed or looking for a job, ticked down 0.1% to 62.8% over the month. The minimal change month-to-month may indicate a decline in the Fed’s effectiveness, according to Bloomberg. If so, a possible December rate change could be an important indicator of how well the economy is actually doing.

October jobs report 2016 WSJ

Another sign of a strong economy was the upward revisions to previous months’ numbers. Total nonfarm payroll in August was revised up to 176,000 (+9,000) and September revisions showed another +35,000 jobs added to the previously reported number of 156,000. In total, there were 44,000 more jobs added over the past two months than originally reported.

Hiring in the financial activities sector continued its upward streak and was responsible for +14,000 jobs added to the economy in October. Over a half of the jobs fell under insurance carriers and related activities. Growth in the financial activities industry has been steady throughout the year, creating one of the best hiring environments in the labor market.

Regardless of these strong numbers, everyone is anticipating that the 2016 election could impact both the Fed’s decision in December as well as the overall economy. Stay tuned!