Job Gains Rebound, Wage Growth Above Three Percent as Labor Market Tightens Further

November 02, 2018

Payroll jobs increased by 250,000 in October, average hourly earnings are up 3.1 percent from a year ago—the largest gain since 2009—and average weekly earnings are up a healthy 3.4 percent for employees.

The unemployment rate remained at 3.7 percent, its lowest level since 1969, and both the employment rate and labor force participation rate moved higher as labor markets continue to tighten.

Job gains were fairly broad-based, with five industries accounting for 65 percent of all job growth:

  • Health care (+46,700),
  • Bars and restaurants (+33,500),
  • Manufacturing (+32,000),
  • Construction (+30,000),
  • Transportation and warehousing (+25,000), and
  • Professional and technical services (+19,700).

Looking ahead:  Trade and tariff issues and Federal Reserve rate increases are likely to restrain job growth for the rest of the year.  However, the latest survey of business economists forecasts the unemployment rate to fall to 3.6 percent in 2019 and average monthly job gains to slow from 190,000 in the fourth quarter of 2018 to 170,000 in the first quarter of 2019.  The median forecast for hourly compensation growth is projected to increase to 3.2 percent in 2019, and corporate profits are expected to rise by 4.8 percent in 2019.