The U.S. economy added 271,000 jobs in October, well above forecasts.
The surge in hiring, the best showing since December, helped pushed down the unemployment rate to 5 percent, the lowest level since April 2008, the Labor Department reported on Friday.
Revised figures showed more jobs growth in August — up 17,000 — but a slight decline of 5,000 jobs in September, reflecting the recent unevenness in the economy amid global turmoil and a stronger dollar that has hampered U.S. exporters.
{mosads}Estimates were for around 180,000 jobs in October, so the report easily beat expectations.
The report could be welcome news for the White House, and perhaps also for Rep. Paul Ryan (R-Wis.), who took over as Speaker last week.
Ryan tweeted that “we need to do more to grow our economy and lift people out of poverty.”
“We need to be bolder,” he added.
Jason Furman, chairman of the Council of Economic Advisers, hailed last week’s bipartisan budget agreement as “an important step toward making long-term investments that will add jobs and boost wages.”
“But there is more work to do to extend these positive trends, including increasing investments in infrastructure, implementing high-standards free trade agreements like the Trans-Pacific Partnership and raising the minimum wage,” he said.
The House and Senate are working toward completing a six-year highway bill aimed at fixing the nation’s roads and bridges among other projects.
On Wall Street, however, the figures will raise expectations of an interest rate hike by the Federal Reserve. Futures and the stock markets fell on the news while the dollar saw more strengthening.
Federal Reserve Chairwoman Janet Yellen on Capitol Hill this week called a December interest rate a “live possibility.”
Diane Swonk, chief economist at Mesirow Financial, said on CNBC that the jobs boost “gives us a chance to move in the right direction and it’s an affirmation that the economy is strong enough to handle” a rate increase next month.
Confidence and jobs gains are coming for low-wage workers where minimum wage increases across states are being implemented.
Daniel Alpert, managing partner of Westwood Capital, tweeted that October was the “month of the little guy.”
“Wage growth stronger and more jobs added in low wage categories then anytime this year,” he said.
Restaurants added 42,000 jobs in October and have hired 368,000 more workers this year, a sign that Americans are going out more.
Meanwhile, wages, which have been persistently stagnant amid steady jobs gains, ticked up last month in the first signal that jobs growth is amounting to labor market tightening.
In October, hourly earnings rose 0.4 percent — up by 9 cents to $25.20 — which is 2.5 percent above levels a year ago and is the largest yearly gain since July 2009, the month after the recession officially ended.
“We’ve hit a very critical tipping point,” Swonk said.
“That isn’t to say there’s still not slack in the U.S. economy,” she added. “And I think what you see now is the next phase of Yellen’s plan and that is to push unemployment even lower to reengage those workers that are not engaged in the labor force.”
Ian Shepherdson, chief economist of Pantheon Macroeconomics, noted that labor market hawks have been waiting for wage data to finally show that the falling unemployment rate means that there is a tightening market.
Even though the labor participation rate didn’t budget from a 38-year low, the civilian labor force grew by 313,000 last month.
Furman said that to keep the unemployment rate stable, the economy needs to add 77,000 jobs per month.
“As an aging population places downward pressure on the labor force participation rate, the economy needs to generate fewer jobs than in the past to keep the unemployment rate constant,” he said.
October is often a strong period for the monthly jobs report. October is the only month to produce more than 200,000 jobs per month since 2012.
Jobs gains have averaged 187,000 a month in the past three months. August’s job numbers were 17,000 higher than initially reported while September posted 5,000 fewer jobs.
Justin Wolfers, an economics professor at the University of Michigan, noted that employment growth at this pace is strong enough to lead to a lower jobless rate.
Construction employment increased by 31,000 in October, adding 233,000 jobs so far this year.
Manufacturing jobs were flat in October following two straight months of losses.
Retailers, which are ramping up for the holidays, added nearly 44,000 jobs in October compared with an average monthly gain of 25,000 over the prior 12 months.
The healthcare industry added 45,000 jobs in October and over the past year has hired 495,000 jobs.
Employment in the mining sector continues to struggle amid low oil prices, falling 5,000 last month. The industry has shed 109,000 jobs since reaching a recent employment peak in December.
This story was updated at 11:02 a.m.