Unemployment Rate Up Slightly in October but Job Market Remains Strong

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The U.S economy added a better-than-expected 128,000 jobs in October, although the unemployment rate increased slightly to 3.6%, according to the U.S. Bureau of Labor Statistics.

The number of unemployed persons was still basically flat at 5.9 million.

The labor force participation rate ticked up slightly to 63.3% and the employment-population ratio was flat at 61%. 

Notable job gains occurred in food services and drinking places, social assistance and financial activities.

Food services and drinking places added 48,000 jobs. Job growth in the industry has averaged 38,000 over the past three months, compared with an average monthly gain of 16,000 in the first seven months of 2019. 

Employment in social assistance increased by 20,000 in October and by 139,000 over the last 12 months. Most of the gain occurred in individual and family services, which added 17,000 jobs over the month and 111,000 over the year.  

In October, employment in financial activities increased by 16,000, with gains in real estate and rental and leasing (+10,000) and in credit intermediation and related activities (+6,000).

Financial activities has added 108,000 jobs over the last 12 months.

Wages continued to increase in October, with the average hourly rate rising by six cents to $28.18.

Over the past 12 months, average hourly earnings have increased by 3.0%, according to the Census Bureau’s data.

In October, average hourly earnings of private-sector production and nonsupervisory employees rose by four cents to $23.70.

“The U.S. added a still impressive 128,000 jobs in October, exceeding consensus expectations by more than 30,000 jobs, while unemployment ticked slightly higher to 3.6 percent,” says Odeta Kushi, deputy chief economist for First American, in a statement. “Wage growth continued at a still healthy 3.0 percent yearly growth.

“Much of U.S. economic growth is driven by consumer spending, and people are expected to keep spending given that jobs are plentiful and wages are rising,” Kushi says.

“The recent third quarter GDP numbers underscored the importance of the consumer in this expansion,” she adds.

Kushi notes that the GDP increased at an annual rate of 1.9 percent in the third quarter of 2019 and that a majority of this growth was driven by a 2.9 percent increase in consumer spending.

“Since consumer spending accounts for 70 percent of economic activity, the continued growth in wages is a good sign for the economy,” she says.

Perhaps the most positive news coming out of this month’s jobs report is the increase in residential construction jobs.

“More hammers means more homes, so October’s month-over-month gain of 2,900 residential construction jobs signals an increase in new home construction may be on the horizon, which would benefit home buyers and the housing market,” Kushi says. “Since the recession, housing starts per construction worker has improved, but seems to have settled just above 1.4 housing starts per worker.”

“The rise in construction jobs is good news for the housing market, as finding ways to increase the productivity of construction workers is critically important to alleviating the labor shortage challenge and the gap between household formation and home building,” Kushi adds.

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