USA financial market indexes edged higher Friday after an October jobs report that significantly beat economists’ expectations.
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With the announcement earlier this week by Federal Reserve Chairman Janet Yellen before Congress that a short-term rate hike was likely in December if the October and November jobs reports were strong.
The unemployment rate, the lowest since April 2008, is at 5.0%.
The job growth was led by health care (44,900), retail (43,800), restaurants (42,000), construction (31,000), and temp help (24,500). The unemployment rate is expected to remain 5.1 percent for a third straight month.
But that didn’t happen in the ’90s and it hasn’t happened recently, either.
Investors have raised to about 70 per cent the probability of a rate increase by policy makers’ December meeting, according to pricing in the federal funds futures market.
Fifteen of 17 primary dealers, or the banks that deal with the Fed directly, polled said they expect the Fed to raise rates in December. Wages are up, as average hourly earnings rose by 9 cents in October and have enjoyed their largest over-the-year increase (2.5 percent) in more than six years.
“Strong wage growth would be a very helpful component to my outlook, and I think also pushing inflation up to 2%, which is what we need”, Mr. Evans said, though he cautioned, “It’s only one number”.
Annual income is rising slowly overall, but in many fields, it’s stagnant or even slowly dropping.
The report could signal a third straight month of tepid job growth after robust gains in the first half of this year averaging more than 200,000 a month.
Understandably, the Dollars has surged against its rivals after the release of the October jobs report.
And a broader measure of unemployment – that includes part-time workers and discouraged Americans who have given up job searches, as well as the unemployed – fell to 9.8% from 10%. “By this time next year, we may be closer to 4% than to 5%, especially if labor force participation continues to decline”.
That’s when the economy looks deceptively good because the Labor Department suddenly starts adding rosy predictions to its mix.
At present, the unemployment rate has dipped 5.0%, which is better than the Federal Reserve’s minimum threshold, and below 58.3% historical average.
The surprisingly strong labor news pretty much removed economists’ doubts about whether the Fed policymakers should begin the long, step-by-step process of raising interest rates to more normal levels. Still, last month was better than August and September when factories cut 28,000 jobs. Oilfield services provider Schlumberger last month announced further layoffs in addition to the 20,000 jobs it has already eliminated. Government added 3,000 jobs.
“The job market is still healthy”, she said.
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The November tally sees only a small boost from statistical assumptions, while the December figure – which comes out after the Fed’s next meeting – backs out a small number of jobs.
