Employment gains exceeded 200,000 for a ninth straight month in October and the jobless rate unexpectedly fell to a six-year low, indicating companies are optimistic the U.S. economy will withstand a slowdown in some overseas markets.
The 214,000 increase in employment followed a 256,000 advance the prior month that was more than initially estimated, Labor Department figures showed today in Washington. The median forecast in a Bloomberg survey of 100 economists called for a 235,000 advance. The jobless rate declined to 5.8 percent, even as more people entered the labor force, boosting the share of the population working to the highest in five years.
Steadfast hiring signals employers are confident domestic demand will hold up in the face of struggling European and emerging economies. Persistent labor-market strength also raises the odds that workers will become more successful in commanding higher wages that, combined with cheaper gasoline prices, lay the groundwork for bigger gains in household spending.
“The global growth slowdown hasn’t stopped us,” David Berson, chief economist at Nationwide Insurance in Columbus, Ohio, said before the report. “Companies do not want to let people go because they’re finding it more difficult to find good replacements.”
The increase in October employment was broad-based, with factories, construction companies and retailers among those adding employees. Payrolls at restaurants jumped 41,800 and hourly earnings for all workers rose less than projected.
Forecasts for October payrolls ranged from increases of 140,000 to 314,000, according to the Bloomberg survey. Revisions to prior reports added 31,000 jobs to payrolls in the previous two months.
Economists surveyed by Bloomberg Oct. 3 to Oct. 8 project payroll gains will average about 220,000 per month in 2014. That would mark the fastest pace of employment growth since 1999. Last year, the U.S. added an average 194,250 jobs each month.
The unemployment rate, which is derived from a Labor Department survey of households, fell to the lowest since July 2008. It was projected to hold at 5.9 percent, according to the survey median.
The share of the population with jobs rose to 59.2 percent in October, the highest since July 2009, from 59 percent the prior month.
Average hourly earnings for all workers rose 0.1 percent in October from the prior month. They were up 2 percent over the past 12 months, less than the 2.1 percent median forecast. The average work week for all employees increased six minutes to 34.6 hours.
Limited wage gains partly explain Americans’ dim perceptions of the economy, which helped Republicans capture control of the Senate from Democrats and solidify their majority in the U.S. House during the midterm elections this week. The results ensured that the GOP will control both chambers of Congress for the remainder of President Barack Obama’s term.
Private payrolls, which don’t include government agencies, increased 209,000 in October after a 244,000 advance. Factories added 15,000 workers after a 9,000 gain in September, today’s report showed. Construction companies took on 12,000 workers
Employment at private service providers rose 181,000 in October, including a 52,000 gain in the leisure and hospitality industry.
The underemployment rate – which includes part-time workers who’d prefer a full-time position and people who want to work but have given up looking – declined to 11.5 percent from 11.8 percent.
Federal Reserve officials cited further labor market progress last week, when they ended monthly asset purchases that have bloated the central bank’s balance sheet to more than $4 trillion in a bid to stimulate growth. The policy making Federal Open Market Committee referenced “solid job gains and a lower unemployment rate.”
They also said an “underutilization of labor resources” that is “gradually diminishing” in the sixth year of the expansion may keep the officials on hold for an increase in their benchmark interest rate, which remains near zero.
Unlike in the U.S., central bankers in Europe and Japan are battling to shore up their economies. Mario Draghi yesterday sought to restore the faith of investors in the European Central Bank’s ability to revive its ailing economy. He said the ECB will buy assets for at least two years and study further stimulus. His comments came days after the Bank of Japan extended its own stimulus campaign.
Gains in employment in the U.S., and more recently a drop in prices at the gas pump, are helping to bolster consumer sentiment and underpin the household purchases that make up about 70 percent of the economy. Ford Motor Co., Toyota Motor Corp., Fiat Chrysler Automobiles NV and Nissan Motor Co. reported October sales that exceeded analysts’ estimates as buyers emboldened by falling gasoline prices flocked to sport- utility vehicles.
“The U.S. economy has steadily improved all year,” Kurt McNeil, U.S. sales chief at General Motors Co., said in a Nov. 3 statement. “Now we are poised for a stronger expansion backed by an improved job market, higher consumer confidence and lower fuel prices.”
The average cost of a gallon of regular gasoline was $2.96 yesterday, the cheapest since December 2010, according to motoring group AAA.
“I think oil is going to have a positive impact on the consumer side of our business,” M. Jack Sanders, chief executive officer at Hartsville, South Carolina-based Sonoco Products Co., said on an Oct. 16 earnings call.