After a sluggish late summer, job growth boomed in October, fueling expectations that interest rates are about to go up.
The U.S. economy added 271,000 nonfarm jobs for the month, according to the U.S. Bureau of Labor Statistics (BLS). That was up significantly from the disappointing 153,000 jobs created in August and the 137,000 added in September.
The additional jobs helped the unemployment rate to drop to 5%, down slightly from 5.1% in September and 5.7% a year ago. The stellar employment data showed the U.S. economy can weather global financial concerns in China and Europe.
Professional and business service sectors led the growth with 78,000 new jobs in October. Administrative and support services added 46,000 jobs, health care grew by 45,000, retail rose by 44,000, and food and beverage businesses gained 42,000. Construction added 31,000 jobs, but the mining sector lost 5,000.
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With the job growth came higher pay. The average hourly earnings inched up 9 cents to $25.20 in October, following a meager 1 cent raise in September. Over the past year, hourly pay has increased by 2.5%.
Still, many workers continue to work fewer hours than preferred or are taking lower-paying jobs in order to make ends meet. The percentage of workers forced to take part-time jobs because full-time work wasn’t available was 9.8% in October, which was down from 10% in September. The average workweek held steady at 34.5 hours.
The brighter than expected job report adds fodder for the Federal Reserve to raise interest rates for the first time in nearly a decade. After the report’s release, economists predicted that a rate increase is almost certain at the Fed’s next meeting in mid-December.
“The report was so strong and broad-based that it will be difficult to deter them from raising rates,” said Michael Gapen, chief United States economist at Barclays, told the New York Times.
Previously, analysts predicted the Feds wouldn’t lift raises until next year. The last time the Fed raised interest rates was in June 2006 before the Great Recession.