U.S. Labor Market Bounces Back in October

U.S Labor Market Bounces Back in October

The U.S. Labor Market Report covering the national employment situation in October showed a gain of 271,000 nonfarm jobs. The unemployment rate edged down to 5.0%. The average workweek was unchanged last month at 34.5 hours, but the average hourly wage increased by nine cents to $25.20. Over the year, average hourly earnings were up by 2.5%, the fastest pace of wage growth since mid-2009.

The employer payroll survey reported that total nonfarm employment in the United States increased by 271,000 jobs in October. The private sector contributed 268,000 jobs to the October increase, while the public sector added 3,000 jobs, all of which were in state government. Employment growth was broad based with nearly every major industry sector adding jobs last month. The exceptions were mining and logging (mainly energy-related activities), and information. The manufacturing sector was flat with a gain of 3,000 jobs in nondurable goods, which was offset by an equal loss in durable goods.

There was also a positive net revision to the August and September figures of 12,000 jobs. Over the past three months, job gains have averaged 187,000 per month. The 2015 year-to-date average monthly gain was 206,000 jobs, somewhat below the 236,000 figure for the same period in 2014.

On a year-to-year basis, U.S. employment expanded by 2.814 million jobs, an increase of 2.0%. In year-to-year terms (YTY), mining and logging was the only industry to record a decline. The largest YTY gain occurred in health care and social assistance with 606,000 jobs added over the year, an increase of 3.3%. Leisure and hospitality added 433,000 jobs (up 2.9%) and retail trade employment rose by 433,000 jobs (up 2.0%). Professional and technical services also posted a strong gain (313,400 jobs, 3.7%), as did administrative and waste services (295,200 jobs, 3.4%).

Turning to the household survey, in October the unemployment rate was 5.0%, the lowest in seven years. The year ago rate was 5.7%. The labor force participation rate held steady at 62.4%, a 38-year low. The more comprehensive U-6 unemployment rate was 9.8%, well below the 20-year average for this indicator of 10.7%. The U-6 unemployment rate counts part-time workers who would prefer full-time work and individuals who have given up looking for a job.

Other labor market indicators also continue to show improvement. The share of workers who have been jobless for 27 weeks or more currently stands at 26.8% of all unemployed persons, down from the year ago rate of 31.9%. Over the past 12 months the number of long-term unemployed persons has fallen by 762,000. The median duration of unemployment is also on the decline, falling from 13.5 weeks in October 2014 to 11.2 weeks last month.

Summary: The addition of 271,000 jobs last month far exceeded expectations and are an indication that underlying economic growth remains solid despite some recent soft readings in the manufacturing sector. Although the LAEDC expects job gains will moderate over the next year as the expansion matures, the unemployment rate will continue to trend down.

Source:  http://www.bls.gov/news.release/pdf/empsit.pdf