Jobs Report: Looking Good

The last jobs report before the election was good news for the Clinton campaign.

The October report, released this morning, showed job creation of 161,000, with unemployment dropping to 4.9%. While slightly lower than the consensus estimate of 175,000, the number of jobs created was strong enough to reflect a fairly healthy economy.

Better yet, wage growth was reported at 2.8% year over year. That’s the strongest rate since the Great Recession. Low unemployment is putting upward pressure on wages as employers have to try harder to retain or attract good workers.

 Jobs have now grown for 73 straight months.

The broadest measure of unemployment, which includes workers who are underemployed or discouraged, fell to 9.5%–its lowest level since the recession. 

While higher wages could constrain some corporate profits, they’re also a bullish sign for consumer spending, one of the most important drivers of economic growth.

One negative in the report was a small drop in the labor force participation rate to 62.8%. Economists have touted the rising rate in recent months as a sign that workers who had given up on looking for a job were returning. Today’s drop could be a hiccup or a sign that the jobs being created aren’t attractive.

Fed watchers already considered a December interest rate hike to be a slam dunk. This report doesn’t change that prediction one iota – in fact, it confirms it.

To sum up: the economy continues to exhibit solid, though not sensational, growth, though that growth is accelerating. Unemployment is low and wages are rising, even though a number of workers remain on the sidelines. And interest rates are likely to head higher starting in December.

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