The last jobs report before the presidential election provided more evidence that the labor market may be at its strongest point since the recession.
According to the Labor Department, employers in October added 161,000 jobs, a little below economists’ expectations but still, as the Los Angeles Times said, “more than enough to absorb new entrants to the workforce and keep the jobless rate from rising.”
The unemployment rate was 4.9% last month after ticking up to 5.% in September, the highest since April.
Perhaps most significantly, average hourly earnings for all employees on private non-farm payrolls rose by 10 cents, or nearly 0.4%, to $25.92 in October. Over the past year, they have increased 2.8% — the fastest annual pace since June 2009, when the Great Recession officially ended.
The October report “adds to the body of evidence that the long and relatively slow recovery is now generating more meaningful income gains for ordinary workers,” the Times said.
U.S. Federal Reserve officials cited the strengthening labor market and rising inflation this week in signaling they may raise interest rates next month. Inflation has been running below the Fed’s 2% target, but Carl R. Tannenbaum, chief economist at Northern Trust in Chicago, noted that “When wages are going up, you’re much more likely to have normal levels of inflation.”
“If you look at average hourly earnings, wages increased 4 tenths [of one percent]; that’s getting to be a pretty hot number,” Scott Colyer, CEO of Advisors Asset Management, told Forbes. ”I think that gives the Fed ample reason to move a quarter of a point in December.”
The latest wage data are consistent with a Census Bureau report in September that showed median household income rising a sharp 5.2% in 2015 from the previous year. Before the recession struck in 2007, average hourly wages rose at an annual rate of as much as 3.6%.
“The last couple of months have seen some very strong increases, so what that means is you’ve got momentum,” Tannenbaum said.