The U.S. economy added more new jobs than expected last month, the Labor Department said Friday, as hiring continues to extend into the crucial holiday season despite reports of freezes and layoffs from some of the country's biggest companies.
The Bureau for Labor Statistics said 261,000 new jobs were created last month, although headline unemployment rate nudged higher to 3.7%, a level not seen since February. The BLS also revised its September jobs addition estimate to 319,000 from its original estimate of 263,000.
The BLS noted that hourly wages were up 0.4%, the biggest monthly gain since July and topping Street forecast. On a year-on-year basis, wages were up 4.7%, slowing from last month's 5% pace.
"If labor growth remains strong and earnings growth slows, it’ll be a win-win for investors since there will be less pressure on the Fed to raise rates," said LPL Financial's chief global strategist Quincy Krosby. The result could be a soft landing in the economy as opposed to a hard one, which means today’s equity markets are probably closer to a bottom than many expected."
U.S. equity futures extended earlier gains following the data release, with the Dow Jones Industrial Average up 545 points higher in the opening hour of trading and the S&P 500 rising 70 points from last night's close.
Benchmark 10-year Treasury note yields were around 3 basis points lower at 4.115% while the U.S. dollar index, which tracks the greenback against a basket of its global peers, was marked 1.66% lower at 111.05.
The CME Group's FedWatch remains split on the chances of a 75 basis point rate hike in December, with the odds on a smaller 50 basis point move pegged at 47.2%,
A pullback in hiring, while challenging for broader economic growth, remains a key plank in Federal Reserve Chairman Jerome Powell's inflation fight, where average hourly wages are growing at a rate of 5% a year - even with more than 10.7 million unfilled positions in the job market as of the end of September.
"The broader picture is of an overheated labor market where demand substantially exceeds supply," Powell told reporters in Washington earlier this week. "We keep looking for signs that sort of the beginning of a gradual softening is happening and maybe that's there, but it's not obvious to me because wages aren't coming down, they're just moving sideways at an elevated level."
