A major auto strike and a slowing manufacturing sector were not enough to knock the U.S. job market off course last month.
Employers added 128,000 jobs in October, the Labor Department said Friday, and revisions to previous months' data tacked on another 95,000 jobs. October's figure would have been stronger had it not been for the strike at General Motors, which shaved close to 50,000 workers from the employment rolls, and for the layoff of some 20,000 temporary census workers.
The unemployment rate was 3.6%, up from 3.5% the month before, but still near a 50-year low. Average hourly earnings rose 3% from a year earlier.
All together, the report painted a picture of a job market that is weathering the storm of trade tensions and cooling global growth, largely because of a resilient, consumer-driven domestic economy.
The Standard & Poor's 500 and Nasdaq stock indexes closed at record highs amid growing signs that recession fears several months ago might have been overblown.
Within 30 minutes of the jobs report's release, President Donald Trump celebrated the figures on Twitter as a "blowout," adding that "USA ROCKS."
The economy still faces challenges. Job growth in manufacturing was weak even accounting for the GM strike, and separate data from the Institute for Supply Management showed that the sector contracted in October for the second-straight month. Overall economic growth has slowed this year, as businesses have pulled back on investment.
Even as economists worry about signs of a hiring slowdown, many employers are focused on a different challenge: how to find workers at a time when the unemployment rate remains near a half-century low.
"The No. 1 concern, for sure, continues to be finding and retaining talent," said Becky Frankiewicz, president of Manpower Group, the staffing firm.
To fill jobs, companies are eliminating degree and certification requirements, improving perks and benefits, and recruiting stay-at-home parents, retirees and people with disabilities and criminal records. Those efforts are having an impact: The labor force participation rate, which measures the share of the population working or actively looking for work, hit a six-year high in October.
But one thing employers remain reluctant to do, Frankiewicz said, is raise pay.
"It continues to perplex me," she said. "The defining challenge for economic growth is going to be bringing people in from the sidelines, and I absolutely believe that's going to require wage acceleration."
Hourly wage growth has been anemic for much of the recovery and has stalled again recently. Average earnings growth picked up slightly in October and was revised upward for September, but growth has slowed over the past year.
Weak wage growth is a challenge not just for workers but also for the broader economy. The length of the average workweek has also fallen slightly, particularly in manufacturing. Without more pay and more hours, it will be hard for consumers to keep spending more money.
While the jobless rate continued to fall during Trump's first two years, median household income, adjusted for inflation, grew at an average annual rate of 1.3%. That's down from a 4.1% annual rate the previous two years and a 1.8% annual rate during Obama's entire second term, according to U.S. Census data released last month.
Job growth so far this year has averaged 167,000 a month, down from an average of 223,000 in 2018, according to Labor Department figures. Even so, hiring remains high enough to keep the unemployment rate from rising even as overall growth has become more tepid. On Wednesday, the government estimated that the economy grew in the July-October quarter at a 1.9% annual rate.
But Friday's report, combined with other recent data, suggests that fears of an imminent recession, which mounted over the summer, were premature.
"It helps reduce the concern that the slowdown was becoming more broad-based and recession risks were right around the corner," said Michael Gapen, chief U.S. economist for Barclays. "I think most people have a slightly more positive view of the U.S. economy now than even two or three weeks ago."
The labor market has been a bastion of consistency throughout the economic expansion, steadily adding jobs despite natural disasters, government shutdowns and political turmoil. The United States has now experienced 109 straight months of job gains, more than double the previous record.
Hiring last year got a push from the 2017 tax cuts, so some slowdown is to be expected as the effects of the cuts wore off. The question is whether hiring stabilizes at a somewhat lower level or continues to fall. Friday's report, though only a single data point, suggests stabilization is more likely.
"It's still respectable," said Julia Pollak, a labor economist for ZipRecruiter, an online job marketplace. "Slow and steady is not necessarily bad."
Consumers have been the main pillar holding up the economy. So far, they are doing fine -- consumer spending was strong in the third quarter, helping to offset weakness elsewhere.
Those same patterns are playing out in the job market. Job growth in manufacturing, which experienced a mini-surge early in Trump's term, has slowed recently, as has hiring in the oil business. But the service sector has remained strong. Hotels and restaurants added more than 50,000 jobs in October, and the retail sector posted a second straight month of gains after months of steady losses. Also, revisions to earlier data erased hints that the slowdown was spreading.
"We could accept data that shows weakness in manufacturing," said Michelle Meyer, head of U.S. economics for Bank of America Merrill Lynch. "Where it becomes a lot more problematic is if that weakness is spreading. We were starting to see indications of that the last few months, but they've now been revised away. It's painting a brighter picture of the service sector of the economy."
That divergence -- between confident consumers and wary businesses -- cannot continue forever. Eventually, either businesses will start to cut jobs, a surefire way to erode consumers' confidence, or free-spending shoppers will set executives' minds at ease and encourage them to ramp up production again.
"At some point in time, either the business sector has to come back or the consumer will falter," said Diane Swonk, chief economist for the accounting firm Grant Thornton.
By many measures, the labor market is still not as strong as at the peak of past economic cycles. A smaller share of working-age adults -- particularly men -- has full-time jobs, and wage growth has been slow.
Information for this article was contributed by Ben Casselman of The New York Times; by Eli Rosenberg and Thomas Heath of The Washington Post; and by Mike Dorning and Catarina Saraiva of Bloomberg News.
A Section on 11/02/2019
Print Headline: U.S. job market remains strong