Jobless Rate Dips, But Increases for Blacks
U.S. employers added a decent 161,000 jobs in October and raised pay sharply for many workers. It was the final major report on a lukewarm but durable economy before Americans choose a new president next week.
The Labor Department’s monthly employment report Friday sketched a picture of a resilient job market. However, African-American workers saw a slight increase in their unemployment rate last month as it increased from 8.3 to 8.6 percent, according to the data. That rate is also higher than it was a year ago when it was 8.4 percent.
The pace of hiring has been consistent with a decent economy, yet one also pocketed by weaknesses that have left many Americans feeling left behind on the eve of Election Day.
Last month’s job growth helped cut the unemployment rate to 4.9 percent from 5 percent. And average hourly pay took a big step up, rising 10 cents an hour to an average of $25.92. That is 2.8 percent higher than a year ago and is the sharpest 12-month rise in seven years. It is unclear from the data if African-American workers benefitted from those gains.
“If you wanted to show that the economy is still getting better for the typical voter, this report gives you what you needed,” said Jed Kolko, chief economist with Indeed, the job site.
The pickup in pay follows a substantial increase last year in earnings for the typical household. The economy appears to be finally delivering widespread raises after years of sluggish pay gains. With the unemployment rate near healthy levels, businesses are likely having to try harder to attract workers.
When businesses are forced to offer higher pay, they may raise prices to cover the costs, potentially boosting inflation. That dynamic has helped make it likely that the Federal Reserve will raise interest rates for the first time this year when it meets next month.
“The only remaining obstacle to the Fed hiking in December would be a significant adverse financial market reaction to the US presidential election,” Chris Williamson, an economist at IHS Markit, wrote in a research note.
Despite the job gains, the economy is growing at the slowest pace of any in a recovery since World War II. Growth picked up to a 2.9 percent annual rate in the July-September quarter, the government has estimated, much faster than the 1.1 percent pace for the first half of the year. But most analysts foresee only modest expansion in the October-December quarter, leaving growth at an anemic rate of about 1.8 percent for all of 2016.
Hiring in October was led by professional and business services, a category that includes mostly higher-paying jobs in engineering, accounting and information technology. Those added 43,000 jobs, followed by health care firms, which gained 39,100.
One surprise was in the retail sector, which shed 1,100 workers last month, a time when hiring typically ramps up for the winter holidays.
The unemployment rate fell in part because many of those out of work stopped searching for jobs and were no longer counted as unemployed. Their exodus lowered the number of unemployed by 150,000 to 7.8 million and pushed down the rate. The proportion of Americans who either have a job or are looking for one fell slightly.