UNEMPLOYMENT RATE FALLS AMID HIRING BURST

With consumers spending more, U.S. employers add 271,000 jobs last month

Washington — An unexpected surge of hiring last month accompanied by strong wage gains suggests that the U.S. labor market remains solid and increases the likelihood that the Federal Reserve will make its first interest rate hike in nearly a decade next month.

The Bureau of Labor Statistics said Friday that employers across a broad spectrum of industries added a net 271,000 new jobs in October. That is far more than most analysts’ forecast of about 180,000 jobs.

The nation’s unemployment rate inched down to 5 percent from 5.1 percent in September — with the labor force expanding, not shrinking as in some recent months.

Washington — U.S. hiring swelled in October by the largest amount all year, and unemployment dropped another notch to 5 percent, increasing the likelihood that the Federal Reserve will raise interest rates next month for the first time in a decade.

With Americans spending more on everything from restaurant meals and clothing to new cars, employers added an impressive 271,000 jobs last month.

That was a strong rebound from August and September, when turmoil in China and other economies overseas proved a drag on the U.S. job market.

Unemployment declined from 5.1 percent in September and is now at its lowest point since April 2008, just a few months after the Great Recession began.

Even before Friday’s report, expectations for a Fed rate increase in December were building. Fed chief Janet Yellen and other top officials said this week that the economy is generally healthy and a move at next month’s meeting is a “live possibility.”

“This data tips the scales toward a rate hike in December, but more importantly is a sign that our economy may have more punch than we thought,” said Tara Sinclair, chief economist for job site Indeed.com.

The Fed cut the short-term rate it controls to a record low of nearly zero in December 2008 to try to stimulate growth during the recession. An increase would eventually raise borrowing costs for mortgages, auto loans and business loans.

The prospect of higher interest rates initially drove down financial markets Thursday, though stock indexes finished mixed. The yield on the benchmark 10-year Treasury note surged to 2.33 percent from 2.23 percent, suggesting that investors see a greater likelihood of a rate increase.

After a prolonged period of relatively stagnant pay for many Americans, hourly wages climbed a solid 9 cents in October to $25.20. Average pay is up 2.5 percent in the past year, the largest annual gain since 2009.

Strong hiring and pay raises, if they continue, could make it harder for Republicans to mount effective attacks on the Obama administration’s economic record and could bolster Democratic prospects in the 2016 elections.

The pay gains should fuel more consumer spending in coming months, which, in turn, could support further hiring.

“These are very strong numbers and likely to continue,” said Carl Tannenbaum, chief economist at Northern Trust. “The two summer months that were low now look like the aberration.”