NOVEMBER 5, 2018 – OCTOBER JOBS NUMBERS CRUSH AND WAGES MOVE UP
Expectations were crushed as the Labor Department reported the US economy added 250,000 jobs in October. The unemployment rate held steady at 3.7 percent, a 49-year low, while year-over-year wage gains were up over 3 percent for the first time since the Great Recession.
The big job gains follow depressed results reported in September in the wake of hurricane season. Last week, September’s results fell, upon revision, to 118,000 from the 134,000 initially reported, while August numbers were revised up to 286,000 from 270,000. Over the last 12 months, new jobs have averaged 211,000 a month despite the economy being at “full employment”.
Even better news is in the form of wage growth, which has been stagnating as the economy recovered. Average hourly earnings rose 3.1 percent year-over-year. The annual gains in wages was the best since 2009. Wages are now outpacing inflation (2 percent), as employers are forced to bid up to get, or retain, workers. Employers have added to their payrolls for a record 97 straight months.
The wage number is closely watched by the Fed, and they’re on track to raise rates a quarter of a percent again in December. Fed Chair Powell believes unemployment can remain low without triggering inflation. Higher wages support the Fed’s plan to raise rates to keep inflation in check.