Total nonfarm employment in America rose by 128K payrolls in October, according to the latest monthly job report from the Bureau of Labor Statistics. That was the smallest gain since May but significantly better than anticipated. The headline print might have been even better if not for the 40K autoworkers involved in the General Motors strike, as well as the many others potentially affected up and down the automotive supply chain. After accounting for the sharp upward revisions to the August and September figures, the less-noisy 3-month average pace of job creation ended October at 176K, comfortably above what is needed to keep up with U.S. population growth. Further, October’s payroll gain was the 109th consecutive month of net hiring in America, the longest streak on record.
Employment growth, though, has admittedly slowed over the past year, but this is consistent with the gradual decline in job creation we suggested should occur following 2018’s above-trend pace of hiring, with some of the moderation likely exacerbated by the trade war. Overall, the labor market still appears in good shape, with historically low rates of unemployment and jobless claims signaling that businesses are not only continuing to hire but also reluctant to let go of the talent they already have. These tight labor conditions are supportive of wage growth, and average hourly earnings rose by 0.2 percent in October and 3.0 percent over the past year, both improvements from the September report. Income gains continue to be especially strong for production (non-managerial) workers and those in typically low-wage industries. This bodes well for consumer spending, the largest component of U.S. GDP, because consumption behavior for lower-income Americans is more sensitive to changes in earnings.
Sources: Econoday, U.S. DoL, Twitter, FRBSL