Job gains top 250,000 in October

November 06, 2017

Keywords: Asset Management

After a disappointing month of job creation, impacted by the torrent of major hurricanes that made landfall, business most definitely picked up in October, sending the unemployment rate to 17-year lows and putting an even greater number of Americans back to work, newly released Labor Department figures reveal.

On a seasonally adjusted basis, the economy gained an additional 261,000 work-related positions in October, according to new figures from the government. The substantial climb in job creation is an about-face to what transpired in September, when the economy actually lost jobs for the first time in seven years.

While impressive, the job recovery that economists widely anticipated fell short of their expectations. They predicted a total of 315,000, according to polling done by The Wall Street Journal.

The actual total - though it may be revised upwardly or downwardly - was roughly in line with the 235,000 new jobs that ADP reported were created in October. Much of the total - 85,500 - came from the goods-producing sector, with an additional 62,000 deriving from the construction industry.

Mark Zandi, chief economist at Moody's Analytics, said the fact that employers rebounded in the manner they did after Hurricanes Irma and Harvey speaks well for the economy's resilience.

"Resurgence in construction jobs shows the rebuilding is already in full swing," Zandi explained, according to CNBC. "Looking through the hurricane-created volatility, job growth is robust."

Unemployment down to 4.1 percent
Moving in the opposite direction is the unemployment rate, which has declined with relative consistency since the start of 2017. Back in January, 4.8 percent of Americans were unemployed. With October's figures now known, the jobless rate is at its lowest point since 2000 at 4.1 percent.

What has yet to improve with equivalent strength are earnings. Wages for the private sector dipped slightly in October to $26.53 per hour, the Labor Department reported. Down 0.04 percent from September, wages were expected to increase by 0.2 percent, according to economists surveyed by the Journal.

Catherine Barrera, chief economist for employment online search engine ZipRecruiter, told The New York Times salaries are barely budging, despite recent economic performance indicators that typically lead to their climbing.

"We've been lamenting for a year about how we've had this great, really low unemployment rate and yet the wage growth is not coming up to what we'd expect historically at these levels," Barrera explained.

Still, household income levels have grown, with the median in 2016 totaling $59,039, according to the Census Bureau. That's up 3.2 percent from 2015 when the median was $57,230.

Saving rate at 10-year low
Americans are also spending more, perhaps as a result of their doing better financially. The Commerce Department reported on Oct. 30 the U.S. saving rate dropped to 3.1 percent in September, its lowest point in 10 years, as noted by the Journal. In 2015, the saving rate was at 6.3 percent.

Unsurprisingly, the stock market reacted favorably to the October employment report. All three indexes - the Dow Jones Industrial Average, the Standard & Poor's 500 as well as the Nasdaq - are projected to finish the week at higher points than where they began. At the closing trading on Nov. 2, the DJIA hit another all-time high at 23,516.26, an 81-point surge.

The jobs and stock market continue to chug along at a favorable clip. But it's important for investors to take a cautionary approach to asset management. Here at Miles Capital, we've observed the economy's fluctuations since our founding and use it a constant reminder that the key to our clients' wealth solutions is consistency and balance, not letting the current trends lead to impulsive reactions.

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