Job growth surged in October, rebounding from a late-summer slowdown that raised concerns about whether global slowness was infecting the U.S.
The Bureau of Labor Statistics reported Friday that nonfarm payrolls grew 271,000 for the month, a sharp jump from weak August and September numbers. The headline unemployment rate declined to 5.0%.
A broader measure of unemployment that includes those who have stopped looking as well as those working part-time for economic reasons declined to 9.8%, the first time it's been below 10% since May 2008.
Perhaps more important than the headline number was the growth in average hourly earnings, which jumped 9 cents an hour, representing an annualized gain of 2.5%. The average work week remained at 34.5 hours.
The labor force participation rate remained at a generational low of 62.4%, though the decline in the total labor force slowed a bit. There were 97,000 fewer Americans counted as not in the labor force, a number that remains near record highs at 94.5 million.
The Federal Reserve watches the monthly number closely for clues about both the strength of job creation and inflationary pressures, particularly from wage growth. The U.S. central bank has been saber-rattling for months regarding interest rate hikes but has yet to pull the trigger amid uneven economic data.
In recent days, Fed officials have insisted that December is on the table as a possible liftoff point for the first funds rate hike in nine years. Friday's nonfarm payrolls report should add to the momentum for a hike. Heading into the payrolls report, traders were pricing in a 58% chance of a hike next month, and that surged to 72% following the payroll report release.
Stock market traders were less enthusiastic; futures, which had been flat heading into the report, turned slightly negative afterwards. Bond yields rose, with the benchmark 10-year note rising past 2.3% and the five-year leaping to near 1.75%.
Economists polled by Reuters expected the nonfarm payrolls report to show 180,000 new jobs added in October, with the unemployment rate to hold steady at 5.1%. That compares to the September number of 137,000, which was revised down from 142,000. August's number got pushed up from 136,000 to 153,000.
Professional and business services led sector gains with 78,000 new jobs. Administrative and support services added the most of the group with 46,000 jobs. Health care grew by 45,000 workers, retail added 44,000 and restaurants and bars increased by 42,000.
Construction also added 31,000 workers, though the mining sector lost 5,000 jobs.