Jobs, wages surge in October, pulling more people into workforce

JOBS BOOM: US Companies Add a Robust 227000 Jobs in October

US job growth seen accelerating; strong annual wage gain expected

The jobs numbers come on the heels of a report Wednesday from payroll processing firm ADP, which revealed that 227,000 private sector jobs were added in October, up from 218,000 in September.

The final major economic report before Tuesday's congressional elections showed that US employers added a stellar 250,000 jobs in October and raised average pay by the most in almost a decade. (People who don't have a job aren't counted as unemployed unless they're actively looking for work.) In October, the proportion of Americans with jobs reached its highest level in 10 years.

"Many large businesses will be able to absorb the higher costs without passing them on to the consumers", said Julia Pollak, a labor economist with ZipRecruiter. The economic expansion is now the second-longest on record, and October marked the 100th straight month of hiring, a record streak. But better late than never, and stronger wage gains might be around the corner.

The unemployment rate held at a multi-decade low while job gains beat expectations in October. And it's unlikely to change the Federal Reserve's strategy of gradually increasing interest rates.

The monthly average job creation now stands at about 180,000 for the last three months.

"When the average family sees their health care costs go up because of Republican actions, these numbers will mean little", he said.

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The Fed is not expected to raise rates at its meeting next Wednesday, but economists believe strong labor market data could see the USA central bank signal an increase in December. That incorporates revised data for September, which saw an unusually low jobs figure thanks to Hurricane Florence. October's hiring was the strongest in eight months.

Payroll increases were broad-based, including 30,000 in construction, 32,000 in manufacturing and 179,000 in services; retailers added 2,400 following a 32,400 decline. Construction expanded by 30,000 positions, almost half of which focus on residential homes.

The Fed is not expected to raise rates at its policy meeting next week, but economists believe October's strong labor market data could see the US central bank signal an increase in December. Retail payrolls rose by only 2,400, likely restrained by layoffs related to Steinhoff's Mattress Firm bankruptcy as well as some store closures by Sears Holdings Corp. Polls show that while voters broadly approve of the economy, they give low ratings to Trump himself. Four years ago, the Baltimore resident and Army veteran said he was working two near-minimum-wage jobs at restaurants and sleeping in a homeless shelter. Americans increased their spending by 4 percent in the July-September quarter, the biggest acceleration in almost four years.

Average hourly wages dipped in October 2017. The personal consumption expenditures price index excluding the volatile food and energy components, which is the Fed's preferred inflation measure, has increased by 2.0 percent for five straight months. But slower sales have started to limit home price increases, which had been running at more than twice the pace of wage gains.

There are signs that pay growth is picking up. But economists said it's still encouraging, as the pay increase remains well above the inflation rate, meaning that workers' pay is actually raising their standard of living. The Fed raised its benchmark federal-funds rate in September to a range between 2% and 2.25%, and most officials signaled they expected to lift rates by another percentage point through next year.

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