Deutsche Asset Management: US labor markets strong but volatile
By Christian Scherrmann, Chief U.S. Economist Deutsche Asset Management
U.S. labor markets were surprising in October, as volatility in the data persisted. An impressive 165,000 new jobs were created, and the previous month's figure was revised from 29,000 to 60,000.
Hiring was widespread, with significant contributions from business services and healthcare, as well as substantial gains in trade, transportation, and manufacturing. The unemployment rate fell by one-tenth of a percent to 4.1%, while the labor force participation rate increased by the same amount to 61.9%, keeping labor markets at full employment.
The increase in hiring supported wage growth, which exceeded expectations at 3.1% year over year and 0.4% month over month. Central bankers will take note of the latter, but wage growth likely remains below rates that would enable companies to fully pass on higher input costs. The report keeps expectations for a December rate hike alive amid the recent tightening of financial conditions as markets digest the midterm elections.