WASHINGTON — A solid October jobs report on Friday spotlighted the durability of the U.S. economy in the face of trade conflicts and a global slowdown.
The economy added 128,000 jobs last month, even though tens of thousands of workers were temporarily counted as unemployed because of the now-settled strike against General Motors. What’s more, the government revised up its combined estimate of job growth for August and September by a robust 95,000.
Although the unemployment rate ticked up from 3.5 percent to 3.6 percent in October, it’s still near a five-decade low.
And for a second straight month, average hourly wages rose a decent 3 percent from a year ago.
The report from the Labor Department suggested that the economy has enough strength to keep expanding, despite the threats from overseas, political tensions at home, a downturn in manufacturing and a gap between the wealthiest Americans and everyone else.
The healthy level of hiring also makes it less likely that the Federal Reserve, which cut short-term interest rates this week for a third time this year, will do so again anytime soon.
“This was an unambiguously strong report,” said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics.
The jobs data put stock investors in a buying mood. The Dow Jones Industrial Average closed up 301 points for the day, or 1.1 percent.
Friday’s jobs report also raised the prospect of further job growth to come. The settlement of the GM strike, which contributed to the temporary loss of 41,600 auto factory and related jobs last month, seems sure to lead to a return of those jobs in coming months.
In addition, the labor-force participation rate, a gauge of how many adults either have a job or are looking for one, reached 63.3 percent, the best since 2013. That suggests that a rising number of people continue to think it’s a good time to find a job.
Besides GM, a temporary drag on hiring last month was the U.S. Census. The government let go of 20,000 short-term workers who had been helping prepare for the 2020 survey.
Job growth so far this year has averaged 167,000 a month, down from an average of 223,000 in 2018, according to Labor Department figures. Even so, hiring remains high enough to keep the unemployment rate from rising. On Wednesday, the government estimated that the economy grew in the July-October quarter at a modest 1.9 percent annual rate.
A slowdown in pay growth is a potential source of concern. Hourly average earnings had been rising at a 3.4 percent annual rate back in February, significantly above the 3 percent pace in October.
However, reduced wage growth might be somewhat misleading.
Employers are giving more opportunities to workers who usually start at lower wage levels, and that might have cut into the overall pay gains, said Julia Pollak, a labor economist at ZipRecuriter, an online job marketplace.
“Given the number of women, the number of Hispanics, the number of blacks, the number of young people entering the workforce,” Pollak said, “it’s quite possible that the influx of all these workers is dragging that average down.”
The hot job market is spurring many employers, though, to raise wages to attract and retain workers.
One employer, Nona Lim, the founder and CEO of a company that supplies rice noodles and broths to grocery stores across the country, says she’s had to raise wages 20-25 percent above the minimum wage of $13.80 in Oakland, California, to attract workers.
“There is a lot of money in the Bay Area in tech, but not necessarily in non-tech,” said Lim, 45. “It gets kind of challenging working in the Bay Area as a manufacturer. The cost of living is high. The minimum wage is high.”
Much of the fuel for overall U.S. growth has come from consumers, who drive about 70 percent of economic activity. Pay raises are helping some of them. In September, consumers stepped up their spending, and their incomes grew fast enough to let them save more, too.
In a sign that consumer spending is helping lead to more hiring, restaurants added 47,500 jobs last month.
But even as consumers help drive growth, business investment has become a drag on the economy. Collectively, businesses have slashed their spending on industrial machinery and other equipment, mostly because the U.S.-China trade war has made them reluctant to commit to big purchases. The tariffs between the U.S. and China, the world’s two largest economies, have also reduced U.S. exports.
Friday’s jobs report hinted at a mixed picture for the start of the holiday shopping season. Retailers added 6,100 jobs last month. But the rise of e-commerce and an increasing concentration of wealth in large U.S. metros have corresponded with the loss of more than 20,000 jobs at retailers over the past 12 months.