United States: Payroll growth surges and unemployment falls to 5.0% in October
October 2, 2015
Non-farm payrolls grew by 271,000 in October, which was almost double September’s revised increase of 137,000 (previously reported: +142,000). October’s result far exceeded market expectations of a 190,000 increase and marked the strongest monthly gain so far this year. The solid figure will serve as encouragement for the Federal Reserve as it considers whether or not to move ahead with an interest rate hike at its next meeting on 16 December. However, additional data releases, including another jobs report in early December, will be crucial factors behind any decision. Some analysts have pointed out that the next jobs report would have to be incredibly weak for the Fed to stay put.
The private sector was responsible for the bulk of new hiring, having added 268,000 jobs in October. The largest gains were registered in professional business services, healthcare and retail. The public sector added just 3,000 jobs in October.
The unemployment rate—derived from a different survey—inched down from 5.1% in September to 5.0% in October. The print was in line with market expectations and continued to mark the best reading since April 2008. The unemployment rate is below the Fed’s target zone of 5.2%–5-5%, although the labor participation rate is still significantly low. Labor participation came in at 62.4% again in October, marking the lowest level in several decades. However, average hourly earnings increased 0.4% over the previous month, and annual wage gains increased from 2.3% in September to a six-year high of 2.5% in October. Moreover, the underemployment rate, a more complete measure which takes into account discouraged workers and part-time workers who want full time jobs, decreased from 10.0% in September to 9.8% in October, which marked the lowest level since May 2008.
Author: Carl Kelly, Economist