The October jobs report showed the economy growing robustly in October—a marked turnaround from September’s disappointing numbers.
The payroll survey reported that employers added 271,000 net new jobs in October, almost double the number of net jobs created in September. The household survey found unemployment falling slightly to 5.0 percent—the lowest since early 2008.
Digging below the headline figures, the details of the October report showed mostly good news. Revisions to the payroll survey showed that employers created 12,000 more jobs than previously believed in August and September. In many previous reports, the unemployment rate fell primarily because Americans left the labor force and no longer count as unemployed. In October, unemployment fell because more Americans found jobs. The overall labor force participation rate remained unchanged.
The payroll survey also showed average wages rising 9 cents an hour to $25.20. Year-over-year average hourly wages have risen 2.5 percent. Inflation has fallen to just 0.2 percent over the past year, so this nominal growth translates into decent real wage growth.
However, this silver cloud still has a dark lining.
While overall unemployment fell, the number of long-term unemployed did not. The average unemployed worker has been jobless for 28 weeks—over six months. Before the recession, workers returned to the workforce almost twice as quickly.
The September jobs report showed the labor market losing steam. The October report shows the labor market accelerating. The truth probably lies somewhere in between.
Both the household survey and the payroll survey have statistical margins of error and fluctuate from month to month. The economy is improving, but the wounds from the Great Recession have not yet fully healed.
