Job Growth on a Roll; U.S. at Full Employment
Guest blog by Dr. Tom Cunningham, Economist and MST Advisory Services, Senior Advisor- Economics
The Bureau of Labor Statistics’ jobs report for October was extremely strong. The November 2 release reported the U.S. added 250,000 jobs in the month, 31-plus percent more than the 190,000 expected. The other highlight number, hourly earnings, also grew substantially at 3.1 percent better than the average hourly wages reported in October 2017 – although the number is somewhat suspect given last year’s unusual decline in wages due to Hurricane Harvey.
Unemployment remained steady at 3.7 percent. However, the U6 rate, which includes people working part-time who want full-time work and others no longer counted on the headline U3 rolls, fell slightly to 7.4 percent. In terms of business sectors, hiring in healthcare was strong as well as in construction, services and durable goods manufacturing. No sector saw a decline. Additionally, revisions to the previous two months, slightly down in September and slightly up for August, had little net consequence.
The disparity between the big new-jobs number and a steadfast U3 rate is largely due to an increase in labor participation. As well, unlike with previous severe weather events, there was “no discernible effect,” according to the BLS, of Hurricane Michael’s landfall, which occurred during the survey period.
Generally speaking, October’s jobs report, as have the reports for most months dating back several years, paints a picture of a strong and strengthening U.S. economy. It’s fair to say that the U.S. is functionally at full employment.
If there is a warning light blinking somewhere, it is that there are more jobs than workers to fill them. The latest Job Openings Layoffs Turnover Separation (JOLTS) report counted more than 7 million jobs currently open and a little more than 6 million people actively looking for work.
About the Author
Tom Cunningham holds a Ph.D. in economics from Columbia University and was senior economist with the Federal Reserve Bank of Atlanta from 1985 to 2015. Mr. Cunningham serves as a consultant to MST in the creation and ongoing development of the MST Virtual Economist and is the MST Advisory economics specialist.
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