In the months between the 2016 elections and the presidential inauguration – as Barack Obama was preparing to leave the White House and Donald Trump was preparing to enter it – the unemployment rate rose at a monthly pace of 0.1 percentage points, settling at 4.8% in January.
That was a lower rate than in all but three of the 96 months of the Obama presidency, and many economists expected it to continue rising or, at best, remain unchanged.
But with the exception of the April to August period, when the jobless rate alternated between 4.3% and 4.4%, unemployment has been on a downward trajectory this year. When the Labor Department released its monthly unemployment report Friday, the jobless rate had declined 0.7 percentage points this year to 4.1%, its lowest level since December 2000.
“Restaurants, bars and hotels made up much of the rebound in jobs,” wrote Akin Oyedele for Business Insider.
This occurred in spite of the fact many people expected unemployment to rise in the aftermath of the hurricanes that struck Texas and Florida in recent months.
“The U.S. labor market has demonstrated particular strength,” said Alexander Kuptsikevich, analyst for London-based FxPro.com. “The increase in payroll employment to 261,000 in October, together with the revision of September data to 18,000, marks almost the same increase between the -33,000 reported last month and the 311,000 increase expected. In addition, the increase in manufacturing jobs by 24,000 in October is a positive sign as far as the state of the industry is concerned, as is the drop of unemployment rate to 4.1.%.”
John Engle, president of Chicago-area family office merchant bank Almington Capital, agreed.
“Even though new job numbers failed to meet expectations, the slight dip in unemployment was welcome,” Engle said. “More importantly, the drop in unemployment was even steeper when including a broader definition of workers, such as discouraged and part-time workers. The drop to 7.9% from 9.5% just a year ago speaks more to the broad-based economic strength than does the conventional measurement.”
As unemployment continued its steady march downward, there were still unresolved issues. While more than a quarter of a million jobs were created in October, that was still about 50,000 shy of the anticipated number, and wages have remained languid, a point that did not escape the notice of Doug Clark, Seattle-based chief portfolio strategist for Prime Advisors Inc., a Sun Life Investment Management company.
“Average hourly earnings declined from 2.9% year over year to 2.4%,” Clark said, “which adds to low inflation pressures within the economy.”
Preeti Varathan and Eshe Nelson of Quartz Media concurred.
“While jobs are plentiful,” they wrote, “what people are actually getting paid has hardly grown.”
Kuptsikevich said hourly earnings “came in as slightly disappointing again. In October, they fell by 1 cent to $26.53. The dollar is registering gains on the back of this report, which market players do not view as entirely favorable but keeps key prospects regarding the economy unchanged.
"We may say that another confirmation of low inflation in the U.S. deserves our attention and may possibly worsen prospects for the dollar, considering that the Fed still faces the problem of unusually low inflation," he said.
“Post release, the fixed income markets have shown little reaction to the numbers as they do not change the expectation for a Fed hike in December that has risen to almost 90% probability,” Clark said.
“There has been significant new information presented to the markets this week,” Clark continued, “including strong earnings reports, the Trump nomination of (Jerome) Powell for Fed chairman and the release of the proposed tax reforms. The Treasury markets have reacted with little volatility, bids have remained strong, and yields on 10-year Treasurys have declined from 2.40% down to 2.34%.”
