The final piece of economic data released before the presidential election Tuesday, the jobs report showed an economy that is steadily emerging from the shadow of the Great Recession, though it is still below its pre-2008 strength.
Jed Kolko, chief economist at Indeed, described the data as very strong, with the important caveat that “the labor market is still not what it was before the recession. Most of these measures are still below where they were in the early 2000s.”
As analysts had predicted, Democratic presidential nominee Hillary Clinton and Republican nominee Donald Trump seized on different aspects of the data to make their closing arguments in the campaign. Jacob Leibenluft, a senior policy adviser to the Clinton campaign, said the jobs numbers were “another reminder of the progress we’ve made since the financial crisis: the longest streak of overall job growth on record, an unemployment rate below 5 percent and wages growing at their fastest pace since the recession.”
Trump national policy director Stephen Miller called the report “disastrous,” saying that it underscored “the total failures of the Obama-Clinton economy that delivers only for donors and special interests and robs working families.” Miller pointed to the economy's sub-3 percent growth during President Obama's term in office and the nearly 500,000 discouraged workers who did not look for work in October because they believed no jobs were available to them.
In an interview, Labor Secretary Thomas Perez had a different take on the same figures, pointing out that the ranks of discouraged workers had dropped to their lowest levels since the beginning of the Obama administration. “It’s important to remember we’re digging out of the worst recession of our lifetime,” Perez said.
The solid jobs report did little to allay the anxiety over the upcoming election that has weighed on stock markets. The Nasdaq composite index and the Standard & Poor's 500-stock index closed down slightly on Friday, after falling for eight consecutive days.
The strongest sign for the economy was the substantial rise in hourly wages, which indicates that growth has helped absorb slack in the labor market, and that employers are competing more to hire and retain workers. Average hourly earnings of private-sector workers rose 2.8 percent in October from a year earlier, the fastest growth since 2009.
“Workers helped bake the pie of prosperity for business," Perez said. "And over the last year and half we’re starting to see that they’re getting a bigger share.”
The wage growth is likely to further lift expectations for the Federal Reserve to raise interest rates at its upcoming mid-December meeting, especially as it comes on the heels of an unexpectedly strong gain in U.S. economic growth in the third quarter.
“We’re increasingly seeing evidence that the labor market is tight enough to put some upward pressure on wages and inflation generally as well,” said Jim O'Sullivan, chief U.S. economist at High Frequency Economics. “The message generally from this is that the Fed probably won’t want the unemployment rate to go a lot lower.”
In a meeting Wednesday, the Fed's policymaking committee said the case for raising rates was strengthening but that officials had “decided, for the time being, to wait for some further evidence of continued progress toward its objectives.”
The data may provide some of that evidence. The U-6 rate, a broad measure of unemployment that includes part-time workers who would like to be full-time, fell to 9.5 percent, its lowest level since the recession. The labor-force participation rate was 62.8 percent in October, almost flat from 62.9 percent the previous month. The biggest job expansion came in professional and business services, followed by health care and financial activities.
The Fed lifted its benchmark interest rate last December but has waited for further signs of an improving labor market before raising interest rates this year.
Still, analysts cautioned that these gains exclude some, including manufacturing and service workers who have lost jobs due to automation. “We’ve been seeing steady improvement... but it’s still the case that we have this pool of long-term unemployed who are really struggling,” said Claire McKenna, a senior policy analyst at the National Employment Law Project, a labor advocacy group.
While the economy continues to recover, the pace is gradually slowing as the country nears fuller employment. American employers have added hundreds of thousands of jobs to their monthly payrolls in past years, but the economy only needs about 60,000 new jobs a month to keep the unemployment rate steady, said Kolko. “It’s likely that we’ll see those monthly payrolls increasingly move toward that level."