U.S. Economy Adds 165,000 Jobs in October as 10-Year Treasury Yield Rises to 4.88%
Key Facts
The U.S. economy added 165,000 nonfarm jobs in October, exceeding the average monthly gain of 48,000 over the previous 12 months, according to the Bureau of Labor Statistics. The report, released on November 6, reinforced the strength of the labor market as the yield on 10-year Treasury notes rose to 4.88%. Reuters said the yield rose 4 basis points after the data were released, after yields initially climbed and then retreated partially. Market tracking showed investors' bets on a rate hike at the next meeting rising to 78% from 70% before the report. The Associated Press said strong hiring could give Federal Reserve officials room to focus on persistent inflation and raise the benchmark interest rate at the December meeting.
Job gains were concentrated in professional and business services, health care, transportation and warehousing, according to the Bureau of Labor Statistics. The distribution reflects job increases across multiple sectors, while total gains exceeded the average for the previous 12 months. Average hourly earnings for private-sector, nonfarm employees rose 14 cents, or 0.4%, to 38 dollars in October. Over 12 months, hourly wages increased 3.1%, according to the report. The wage increase is among the report's details that markets are tracking alongside the strength of hiring.
In a more mixed indicator of workers' conditions, the number of people working part time for economic reasons rose by 339,000 to 4.8 million in October. This measure includes people who prefer full-time work but are working fewer hours because their hours were cut or because they could not find a full-time job. The figure offers another view of the labor market alongside nonfarm job growth and wage gains. Markets tracked the bond reaction after the report, as part of the initial rise in yields faded. As of November 9, 10-year yields stood at 4.859%, about 40 basis points below their level at the start of October.
Attention is turning to the U.S. Consumer Price Index for October, scheduled for release Tuesday, November 10. Economists expected inflation to rise to 3.9% in October from 3.7% in September, according to the Associated Press. Federal Reserve Board member Christopher Waller was also scheduled to speak about the economic outlook at the Bank of England and its watchers conference in London on November 10. The price data are due as market bets on a December rate hike have risen following the jobs report. The Treasury is scheduled to sell 42 billion dollars of 10-year notes on Tuesday, in another test of investor demand for U.S. debt.
The next jobs report, covering November, is scheduled for release on December 4 at 8:30 a.m. Eastern Time, according to the Bureau of Labor Statistics. The release will come after the Federal Reserve's scheduled December meeting, which has featured in market tracking as a possible date for a rate hike. The October report remains the focus of current attention because job gains exceeded the average for the previous 12 months. Its data also showed monthly and annual wage increases, alongside a rise in the number of people working part time for economic reasons. These indicators precede the inflation data and bond auction scheduled for November 10.