U.S. adds 261,000 jobs as storm effects reverse; wages stall
U.S. employers added the most workers in a year, rebounding from September’s slowdown, as people resumed work after hurricanes Harvey and Irma, Labor Department figures showed Friday. The jobless rate fell to the lowest since 2000 while wages stalled.
Highlights of jobs report (October)
- Payrolls rose 261k (est. 313k) after 18k advance; revisions added 90k to Aug.-Sept. figures, including turning Sept. drop into a gain
- Unemployment rate, derived from a separate Labor Department survey of households, fell to 4.1% (est. 4.2%) from 4.2%
- Average hourly earnings little changed m/m (est. 0.2% rise); up 2.4% y/y (est. 2.7%) after downwardly revised 2.8%
- Participation rate, or share of working-age people in the labor force, decreased to 62.7% from 63.1%, as size of workforce shrank
The report indicates the fallout from the hurricanes, which had depressed the labor market the prior month, largely dissipated in October. Jobs bounced back at restaurants and bars, which added 89,000 workers after a 98,000 drop in September.
Weather-related distortions may make it hard to read too much into the data until the end of the year. Still, economists expect a return to the underlying trend of steady, albeit slower, hiring that’s still enough to keep pushing down the unemployment rate.
The jobless rate fell as both the number of unemployed and employed workers declined, shrinking the labor force. Wages were a weak spot in October, though economists had penciled in a slowdown as low-paid workers at restaurants returned to their jobs, bringing down the average.
Even so, across the country, employers are reluctant to fire staff amid a shortage of qualified workers, while Americans are more upbeat about employment prospects. That bodes well for consumer spending, the biggest part of the economy.
With payroll gains averaging about 162,000 over the past three months, the jobs report broadly provided more evidence the economy is approaching maximum employment, probably keeping Federal Reserve policy makers on track to raise interest rates in December for the third time this year. President Donald Trump on Thursday named Jerome Powell to lead the Fed, replacing Chair Janet Yellen.
“There are obviously storm distortions in this report, but the decline in the unemployment rate reflects ongoing improvement in the labor market. November is going to clear a lot of this up,” said Michael Gapen, chief U.S. economist at Barclays Plc in New York and a former Fed official. The report “is in line with the Fed’s expectations. It definitely increases the odds of a December rate increase.”
Over the longer term, “the participation rate has been generally moving sideways and I don’t think that story has changed,” Gapen said. “The Fed will take the decline in the participation rate with a grain of salt.”
- The U-6 underemployment rate fell to 7.9%, lowest since December 2006, from 8.3%; measure includes part-time workers who’d prefer a full-time position and people who want a job but aren’t actively looking
- Manufacturing payrolls rose by 24,000; construction hiring added 11,000 jobs; retailers cut staff by 8,300; professional and business services added 50,000 workers, most since May
- People working part-time for economic reasons fell by 369,000 to 4.75 million, lowest since December 2007
- Private employment rose by 252,000 (forecast 302,000) after increasing 15,000; government payrolls rose by 9,000 Average workweek for all workers unchanged at 34.4 hours (forecast 34.4 hours)
- Number of people out of work for 27 weeks or longer, or the so-called long-term unemployed, fell as a share of all jobless to 24.8% from 25.5%