What's going on?
The US voted to work in October: the economy added 128,000 jobs last month, according to data released on Friday. That’s more than economists predicted, and more than they were entitled to.
What does this mean?
Worker strikes at automaker General Motors, as well as the dismissal of some temporary staff working on the forthcoming US Census, would’ve caused employment figures to shrink somewhat. But hiring in service industries like hospitality and leisure, education, and professional services (i.e. accountants and lawyers) more than made up for the decline. The official estimate for job growth in September was increased too.
Those are good signs for the US economy. Consumer spending was to thank for higher-than-expected economic growth last quarter, and with workers getting paid 3% more on average over the last year, their spend-happy ways may yet continue this quarter.
Why should I care?
For you personally: More than yer jobsworth.
Some economists reckon the current “tight” US labor market – one where it’s hard to find workers – is to thank for higher-than-expected job additions. Companies might be loath to let employees go because, should the current economic slowdown expectedly pick back up, it’ll cost more time and money in the long run to tempt workers to switch roles.
The bigger picture: Employment and inflation go hand in hand.
Two of the US Federal Reserve’s main responsibilities are promoting “maximum” employment and stable prices. And in a sense, those responsibilities are two sides of the same coin. Lower interest rates encourage more spending (by making saving less rewarding) and the subsequent demand for products might push their prices up. But so too might maximum employment, when companies try to lure employees into new roles – or keep them in existing ones – by doling out pay rises, and those employees can therefore spend more, all else equal.