WASHINGTON (11/9/15)--Payroll expansion exploded in October, offsetting two consecutive weak monthly performances and potentially arming the Federal Reserve with enough justification to raise interest rates at its December meeting.
The economy added 271,000 jobs and the unemployment rate dropped to 5%, according to the Bureau of Labor Statistics (Economy.com Nov. 6). The three-month average for job adds climbed to 187,000.
“The October report dispelled the notion that the labor market was slowing,” said Sophia Koropeckyj, Moody’s analyst (Economy.com). “It also likely dispelled the notion that the Fed will wait until 2016 to begin tightening monetary policy.”
Koropeckyj added that job gains were broad based.
By industry, construction added 31,000 jobs, retail trade added 43,800, and professional/business services added 78,000. Education healthcare (57,000) and leisure/hospitality (41,000) also posted strong months of job growth.
In addition to strong payroll expansion, hourly earnings for all workers accelerated to 2.48%, while the average work week went unchanged at 34.5 hours. The number of involuntary part-time workers also fell demonstrably, another welcome sign, according to analysts.
“Wage growth has finally broken out of the range of around 2% to 2.2%, a range that has puzzled economists given the tightening labor market,” Koropeckyj said. “Wage growth accelerated in a number of industries, particularly construction, professional/business and healthcare industries that have struggled with worker shortages.”