Economy weathers trade, slowdown storm
128,000 jobs added in Oct. as jobless rate rises slightly to 3.6%
WASHINGTON — A solid October jobs report Friday spotlighted the surprising durability of the U.S. economy in the face of persistent trade conflicts and a global slowdown.
The economy managed to add 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.
Though the unemployment rate ticked up from 3.5% to 3.6% in October, it’s still near a five-decade low.
And for a second straight month, average hourly wages rose a decent, if less than spectacular, 3% 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 chronic 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 rose 301 points, up 1.1%, to close at 27,347.36.
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 likely other 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 looking for one, reached 63.3%, 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.
The economy has been expanding for more than a decade, the longest period of growth on record. But the bump from the 2018 tax cuts is fading, and an aging population and other demographic forces are slowing potential growth.
That slowdown could be worrisome for President Donald Trump, who is seeking re-election next year amid an impeachment inquiry. The economy appears unable to achieve the lasting growth of more than 3% annually that Trump had promised. Within 30 minutes of the jobs report’s release, though, the president celebrated the figures on Twitter as a “blowout,” adding that “USA ROCKS.”
Job growth 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 even as overall growth has become more tepid. On Wednesday, the government estimated that the economy grew in the July-October quarter at a modest 1.9% annual rate.
Much of the fuel for overall U.S. growth has come from consumers, who drive about 70% of economic activity. Pay raises are helping some of them. In September, consumers modestly stepped up their spending, and their incomes grew fast enough to let them save more, too.
In a sign that consumer spending is helping to 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.