Another Solid Month for the Job Market

Economic Blog
November 1, 2019

The U.S. labor market stood strong against headwinds in October.

Nonfarm payrolls increased 128,000 last month, higher than consensus estimates for an 85,000 gain. October’s payrolls beat expectations despite a 42,000 slide in automaker payrolls, largely from the General Motors strike. August and September’s job gains were also revised up by 95,000.

As shown in the LPL Chart of the Day, payrolls have grown an average of 175,000 over the past 12 months, around the average pace for this economic expansion.

Solid October jobs data shows the engine of the U.S. economy is humming along despite elevated global uncertainty, a good sign for future growth as improving hiring conditions fuel consumer spending and confidence. Payrolls growth has moderated this year, but we’ve also expected some slowing in hiring as the cycle ages and the labor market tightens further.

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“Jobs are growing at a solid pace,” said LPL Financial Senior Market Strategist Ryan Detrick. “Some investors have feared that trade tensions and global weakness could curb U.S. hiring, but the October jobs report shows that hasn’t been the case yet.”

Underlying details of the October jobs report were also encouraging. The unemployment rate was 3.6%, still near a cycle low. Average hourly earnings grew 3% year over year in October, a pace we think could buoy personal incomes without raising concerns about overheating.

The labor force participation rate, which measures the amount of the working-age population that is employed or actively looking for jobs, rose to its highest level since June 2013. That’s an especially favorable development, as we typically see workforce participation rise when consumers have a positive view of economic and labor-market conditions.

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