The labor market expanded at a moderate pace in October, posting its ninth consecutive monthly gain above 200,000 new jobs according to this morning’s report from the U.S. Bureau of Labor Statistics. The unemployment rate dropped another notch, but the tightening is not translating into higher wages. Here are the details:
- Employers added 214,000 net new payroll jobs last month, similar to the 220,000 jobs that Bloomberg’s survey of economists had forecasted. August and September totals were revised higher by a combined 31,000 jobs. The average monthly increase year-to-date through October is 229,000, up from 194,000 in 2013.
- Leisure and hospitality led all sectors with a gain of 52,000 jobs, concentrated mostly in restaurants.
- The education and health services sector was second, adding 41,000 jobs. Of this total, 24,500 were in health care despite ongoing efforts by providers to trim costs.
- Professional and business services came in third, with 37,000 jobs created last month. The other two big office-using sectors were mostly flat, as finance added 3,000 and information subtracted 4,000, the only major sector to lose jobs in October.
- The goods-producing sectors did well, with manufacturing and construction adding 15,000 and 12,000 jobs, respectively. Besides manufacturing, the other two big sectors driving demand for industrial space also performed well, as transportation and warehouse employment increased by 13,300 and wholesale trade added 8,500.
- Retailers increased payrolls by 27,100, a vote of confidence in the holiday shopping season.
- The public sector added a modest 5,000 jobs, with gains in local government employment offsetting losses at the U.S. Postal Service.
- Wage growth remained tepid. The average hourly earnings for all employees rose by 0.1% last month and by 2.0% from a year ago. Weak wage growth has restrained both the pace of economic expansion and the rate of inflation, prompting the Federal Reserve to keep interest rates low.
- The unemployment rate fell by one-tenth of a point to 5.8%, its lowest level since July 2008. The U6 rate, which includes discouraged, marginally attached and underemployed workers, was 11.5%, down from 13.7% a year ago.
Today’s report delivers three key takeaways:
- The labor market continues to grow at a solid, non-inflationary pace. Growth has been remarkably consistent, showing little sign of weakening or accelerating in recent months.
- Wage growth remains slow—a negative for wage earners and consumer spending, but a positive for the inflation outlook.
- The combination of solid employment growth and low inflation/interest rates has created a sweet spot for commercial real estate. The economy is strong enough to generate sustained leasing activity for all property types, but still has enough slack to permit the Fed to maintain low interest rates—a key factor supporting the surge of investor demand for CRE assets.
Robert Bach Director of Research – Americas
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