After two weak months of employment figures, hiring has surged by 271,000 in October, increasing the odds of an interest rate hike by the Federal Reserve next month.
New jobs have brought the unemployment rate down from 5.1 percent to 5 percent, the lowest it has been in the past seven years. The hiring increase is across a variety of industry sectors showing that companies are starting to overcome their recent issues of slow overseas growth and a struggling manufacturing sector. The most significant gains were the retail, health care, and construction sectors.
The government report issued on Friday shows that the U.S. economy is recovering after shaking off a worrisome summer, and is continuing to outperform other major economies. Also, despite the global issues over the last two months, U.S. consumers have kept up their spending, helping support job growth despite flat factory payrolls and layoffs in the oil and gas industry.
The report had a temporary negative effect on the stock market, as the prospect of Fed raising rates pushed financial markets downwards while the yield on benchmark ten year Treasury notes jumped from 2.23 to 2.33 percent on Thursday, indicating a consensus among investors over the probability of a rate hike.
In addition to a surge in hiring, last month also saw an increase in wages for the employees after a prolonged period with rather stagnant pay increases. Wages went up by 9 cents to an average of $25.20, an increase of 2.5 percent compared to 12 months ago. This represents the sharpest gain in consecutive years since July 2009, and is comfortably above inflation, which has remained flat over the last year.
With Christmas approaching, the increases in wages is also likely to fuel further spending by consumers which may boost the increase in jobs even further.