There was a lot of important information on the U.S. economy released this week, but the biggest data point is without a doubt the latest monthly job report from the Bureau of Labor Statistics (BLS) out this morning. Indeed, total nonfarm employment in America jumped by 250,000 payrolls in October, significantly better than the 190,000 increase economists anticipated.
A rebound in hiring was expected following the temporary disruption caused by hurricane Florence in September, but few analysts were looking for such a large bounce back in payrolls since it was believed hurricane Michael would provide a similar drag in October. In fact, the BLS said that 198,000 Americans missed work last month due to bad weather, nearly six times larger than what occurred this same period last year. Clearly the two hurricanes have made recent payrolls data quite noisy, and sharp revisions could be seen over the next few months. The longer-term trend, though, appears intact, with job gains easily outpacing population growth.
Going forward, hiring should slowly pull back from these elevated levels as excess slack continues to be removed from the labor market. These tightening conditions will put upward pressure on employee compensation as businesses compete for talent. Moreover, average hourly earnings have risen by 3.1 percent over the past twelve months, the fastest pace of annual wage growth recorded since April 2009. Although encouraging, even larger income gains may be needed to sustain consumer spending, and in turn help this current economic expansion become the longest on record.
Sources: Econoday, U.S. DoL, ZH, Bloomberg, Twitter, FRBSL
Post author: Charles Couch