U.S. job growth jumped in October after two consecutive months of moderate gains, and the unemployment rate fell to a new seven-year low of 5 percent, the government reported Friday, making it likely that the Federal Reserve (Fed) will raise interest rates for the first time in nine years in December. The Labor Department said employers added 271,000 jobs last month, the biggest monthly increase since December 2014. Economists had expected October job creation of about 180,000. Data from September and August was revised to show 12,000 more jobs created than previously reported. The burst of hiring across a range of industries indicated that companies ignored slower overseas growth and a weakening U.S. manufacturing sector. Significant job gains were seen in construction, healthcare, and retail, although manufacturing employment was flat, and oil and natural-gas drillers cut jobs. The unemployment rate fell to 5 percent—the lowest level since April 2008—from 5.1 percent the previous three months. Steady hiring should continue to reduce the unemployment rate. The economy typically needs only about 100,000 jobs a month to prevent the rate from rising. The unemployment rate now is at a level many Fed officials see as consistent with full employment. Moreover, any October jobs gain above about 150,000 was expected to keep central-bank policymakers on track to raise interest rates from record lows near zero at their mid-December meeting. Strong hiring in October also raised wages 9 cents to an average of $25.20 an hour, 2.5 percent above a year ago, the biggest 12-month gain since mid-2009. Healthy consumer spending—which accounts for 70 percent of U.S. economic activity—is supporting strong job growth. Spending has been helped by lower gasoline prices and a recovery in the stock market. Recent data suggests that a global slowdown and manufacturing's difficulties have not hurt the entire U.S. economy. The economy grew at only a 1.5 percent annual rate in the July-September quarter. The sharp deceleration from the second quarter's 3.5 percent growth rate was largely because businesses reduced their inventories, and exports weakened.
