Non-Farm Payrolls Jump 250,000, but Wage Growth Surge Steals Show

“Wow” should have been your first reaction to Friday’s U.S. Non-Farm Payrolls report. Today’s numbers showed that the job market is doing amazingly well, especially this late in the economic expansion. Government data said that October job growth trounced the estimates and year-over-year wage gains surged past 3 percent for the first time since the Great Recession.

The raw data from the Labor Department showed Non-Farm Payrolls jumped by 250,000 for the month, well above the consensus estimate of 194,000. The Unemployment Rate came in as expected at 3.7 percent, matching September’s figure. This was also the lowest reading since December 1969.

Further details showed the number of employed rose to a new record 156.6 million and the employment-to-population ratio increased to 60.6 percent, the highest level since December 2008, according to the Labor Department’s household survey.

Additionally, the report showed that the headline jobless number stayed level even amid a two-tenths of a percentage point rise in the labor force participation rate to 62.9 percent. Those counted as outside the labor force tumbled by 487,000 to 95.9 million.

Huge Jump in Wages

The Fed had been warning about the return of inflation, but all of its proof was in its preferred PCE Index and to a lesser extent, the Consumer Price Index. Now it has further proof with the big jump in wage growth in October.

According to the Labor Department, Average Hourly Earnings increased by 5 cents an hour for the month and 83 cents year-over-year, representing a 3.1 percent gain. The annual increase in wages was the best since 2009.

The report of higher wage growth means the Fed will raise rates a fourth time this year in December. Additionally, it likely means the Fed will stay the course to keep inflation under control by raising rates at least three times in 2019.

More on the Report

The numbers continued to come in for August and September. August’s number were revised higher from 270,000 to 286,000. September’s numbers were still a mess because of the hurricanes that hit the Carolinas. That month’s number continued to fall from 134,000 to 118,000.

Over the past 12 months, job gains averaged a solid 211,000 per month.

Finally, job growth skewed by full-time positions, which rose by 318,000, while part-time jobs increased by 242,000, according to the Labor Department’s household survey.