The US economy added 161,000 jobs in October, the final jobs report before the election. The unemployment rate dipped to 4.9%.
The figure was below the 175,000 economists had forecast for the month but August’s jobs number was revised up to 176,000 from 167,000, and September was revised to 191,000 from 156,000. Wage growth accelerated to its strongest pace since the recession.
Though much of the electoral discussion has hinged on the economic woes of the middle class, the latest figures were broadly inline with expectations and are unlikely to affect the election itself this close to the opening of the polls on Tuesday.
Labor secretary Thomas Perez said he believed continuing growth in the healthcare sector in particular was due to the passage of the controversial Affordable Care Act (ACA) in 2010.
“The folks who said the Affordable Care Act was going to be a job-killer aren’t looking at the data,” Perez said. “As the ACA has really kicked in over the last two years we’ve seen solid job growth in the hospital sector as well. More people are using healthcare.”
“The three-month moving average of job growth was 176,000, about double the pace needed to keep up with underlying growth in the labor force, allowing for a continued diminishment of labor market slack,” said Stuart Hoffman, chief economist with PNC.
Hoffman noted that the labor force participation rate – the number of people in work or actively seeking employment – fell slightly.
Perhaps the most encouraging number was a rise in average hourly earnings, which climbed 0.4% in October, and were up 2.8% from a year earlier, the fastest pace since June 2009. As the job market gets tighter, firms are responding to tougher competition for workers by raising pay. This is a big positive for income growth, consumer spending, and the overall economy.
“Workers have been looking for a raise for some time,” Perez said. “They deserve that raise and they’re getting that raise, and that’s good news.”
Though he is not allowed to comment on the election, Perez said he hoped for the passage of ballot measures increasing the minimum wage in four states: Arizona, Colorado, Maine and Washington.
Though state initiatives could improve wages locally, Perez blamed Republicans “stonewalling on common-sense legislation that’s usually been bipartisan” for the gridlock on the Federal minimum wage, frozen at what he called a too-low $7.25 an hour.“People understand that seven and a quarter an hour is not enough to feed your family,” he said.
“Obama will be only the third president since FDR signed the Fair Labor Standards Act not to increase the minimum wage,” Perez said. “That’s unconscionable.”
Some 8.65m jobs have been added under Barack Obama during his second term, 1.3m during his first. At its height in October of 2010 after the Bush-era housing market collapse, unemployment stood at a full 10% of the US workforce. The number is now less than half that.
The question of the quality of job growth has been paramount this year: in October food service was the biggest growth area, a traditionally lower-paid industry where benefits are scarce. The healthcare sector added 31,000 jobs in October, the month’s fastest growing sector. Retail lost 1,100 over the month, a surprise drop in a month when retail jobs usually start picking up.
The report once again highlighted the uneven nature of the US jobs market: Hispanic unemployment declined to 5.7% but rates for most other groups showed little change. African American unemployment was steady at 8.6%. The number of long-term unemployed was unchanged at 2 million and accounted for more than a quarter of the total unemployed.
Growth in the healthcare sector has long been expected as baby boomers age in the US – indeed, “population aging is accelerating rapidly worldwide”, according to a report from professional services firm Deloitte on the expected state of the industry in 2016. “In higher-income countries, increasing life expectancy is mainly due to declining mortality among those who are older.”
The report is likely to strengthen the Federal Reserve’s resolve to raise rates at its next meeting in December. Growth is not as rapid as Wall Street would like, but with October stronger than September, the case for increasing the interest rate is better than it might have been.
“This solid jobs report – good job growth, a decline in labor market slack, and a pickup in wage growth – is a green light for an increase in the fed funds rate at the Federal Open Market Committee’s [meeting] December 13 and 14,” wrote Hoffman.
This article was written by Sam Thielman in New York, for theguardian.com on Friday 4th November 2016 12.51 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010