The Dow Jones Industrial Average was off about 200 points, or 0.8%, at 25,193 in early afternoon after rising initially following the strong jobs news, which featured a 250,000 rise in nonfarm payrolls last month, better than 50,000 above economists' consensus guesses.
USA job growth likely rebounded in October, with wages expected to have recorded their largest annual gain in 9-1/2 years, pointing to further labor market tightening that could encourage the Federal Reserve to raise interest rates again in December.
"In a strong report overall, the big news in this morning's October jobs report was the annual change in wage growth exceeding 3 percent for the first time since April 2009", said Joel Kan, associate vice president of economic and industry forecasts for the Mortgage Bankers Association. Businesses are staffing up at a rapid pace in response to healthy consumer spending and strong economic growth. The economy is now in one of the longest expansions in modern US history.
Though economists predict that hiring will eventually slow as the pool of unemployed Americans dwindles, there's no sign of that happening yet.
And central bankers have made clear they expected to continue to gradually raise the benchmark lending rate for some time, including an expected three increases next year.
FBN's Blake Burman breaks down the October jobs report.
The good news foreshadows more interest-rate increases from the Federal Reserve. The headline unemployment rate remained at 3.7%, the lowest since December 1969, and for the right reasons. President Donald Trump cheered the robust jobs report, which came less than a week before the midterm elections that will decide who controls the U.S. Congress. The Labor Department send 6,000 new jobs were added in autos and auto parts and almost 5,000 jobs by makers of machinery.
The rebound in job creation last month was widely expected.
"The risk in 2019 is that the Fed will increase the pace of rate hikes", said Joe Brusuelas, chief economist at RSM in NY. Average monthly hiring this year is above the pace of 2017. Construction expanded by 30,000 positions, almost half of which focus on residential homes.
Retail payrolls probably remained weak, weighed down by layoffs related to Steinhoff's Mattress Firm bankruptcy as well as some store closures by Sears Holdings Corp. Four years ago, the Baltimore resident and Army veteran said he was working two near-minimum-wage jobs at restaurants and sleeping in a homeless shelter.
As Americans become more confident about their job prospects, they are coming off the sidelines and looking for work.
A measure of compensation that includes benefits and covers all workers, including government employees, rose 2.8 percent in the third quarter from a year earlier, the Labor Department report said. The average workweek rose to 34.5 hours from 34.4 hours in September.
These numbers also were reflected in an uptick of 0.2 percentage points in the labor-force participation rate, to 62.9%. So far, hiring in the manufacturing sector does not appear to have been affected by the White House's protectionist trade policy, which has contributed to capacity constraints at factories.
"Average wages are finally starting to pick up, especially for some lower-skilled positions", said Andrew Chamberlain, chief economist at Glassdoor.
There is some concern that higher wages might fuel inflation if companies turn around and increase prices for consumers. And so far, inflation remains in check. Both hourly and weekly earnings are rising faster than inflation, which rose by 2.0 percent using the Personal Consumption Expenses (PCE)-the Federal Reserve's preferred measure, because it is so broad-in the most recent data from September.