US job growth rebounds; strong annual wage gain expected

Eileen GuzmanNov 04, 2018

"Wage growth is getting faster, but annual growth is probably closer to 2.9 percent than 3.1 percent due to abnormally low wages last October (likely weather related)", said Ben Zipperer, an economist at the left-leaning Economic Policy Institute, on Twitter.

Most of the net new jobs in October came from health care, construction, and manufacturing, which has added 296,000 jobs over the past year.

"It's a terrific report".

Here are three takeaways about the latest report and what it means for the economy. Among the major worker groups, the unemployment rates for adult men (3.5 percent), adult women (3.4 percent), teenagers (11.9 percent), Whites (3.3 percent), Blacks (6.2 percent), Asians (3.2 percent), and Hispanics (4.4 percent) showed little or no change in October.

This incredibly tight labour market story is increasingly evident in the wage data with average hourly earnings jumping to 3.1% year-on-year from 2.8% in September. Additionally, the baseline for the wage increase is lower because it is compared to October 2017, when wages dipped.

Housing remains a weak spot in the economy, with sales of existing homes having fallen for six straight months as mortgage rates have risen to almost 5 per cent.

The long-term trends are also troubling.

According to a report last week from the research arm of the payroll processing firm ADP, for instance, American workers are earning almost $1 more per hour on average than they were a year ago. Businesses are staffing up at a rapid pace in response to healthy consumer spending and strong economic growth.

"Unemployment at 3.7%. Wages UP!" North said that means existing employees are likely working more hours each week as the labor force tightens and employers have a hard time finding workers. An estimated 711,000 people joined the labor force last month. That could be an early indicator that people who had given up on finding a job are now starting to look for work. For the prime-age population, the participation rate jumped to 82.3% from 81.8% in September.

If employees are pleased with their higher paychecks, financial markets tend to get nervous when wages climb too much since they're believed to lead to inflation.

Trump's approval ratings in Gallup's weekly poll have been mired in a narrow range between 38 percent and 44 percent since September, a level that historically corresponds with losses for the president's party in midterm elections.

The robust economy has been a comfort to Republicans and President Donald Trump, who face a potential backlash from voters in Tuesday's midterms. Professional and business services 35,000.

"It's a huge milestone", Scott Anderson, chief economist for Bank of the West, said of the wage growth. "This isn't coming from excellent stewardship of the economy". "Wages are firming on a nominal basis for workers", said Ernie Tedeschi, head of fiscal analysis at Evercore ISI and a former economist in the Obama administration. Early signs show both of those categories are ticking up slightly, though some companies have also used their tax cuts for stock buybacks instead of putting the money into investments or higher wages. Twenty-one thousand of the new manufacturing goods were in durable goods manufacturing, including more than 10 thousand in transportation manufacturing.

Kinestral Technologies Inc., which engineers and manufactures smart-tinting windows for homes and commercial buildings, has added about six people to its USA staff of just more than 100.

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