For the past few months, there have been concerns the U.S. labor market was beginning to slow down. By all standards, the labor market was still quite strong. But a caution that the monthly pace of job gains was gradually subsiding began to resonate across the financial markets. However, the Department of Labor’s October employment report triggered a collective sigh of relief on Wall Street.
In October, the economy added 128,000 new non-farm jobs, above the 90,000 the markets were expecting. The August and September monthly gains were also revised higher by a combined 95,000 jobs to 219,000 and 180,000, respectively. The national unemployment rate was reported at 3.6%, just above the 50-year low of 3.5% set in September. Annual wage growth remained at 3%, near a 10-year high. October was the 15th consecutive month of 3% or greater wage growth. Year-to-date, the economy is averaging a very healthy 167,000 new jobs per month.
The renewed assurance in America’s labor market has been a key driver in the recent surge in stock prices. On Thursday, the Dow Jones Industrial Average (DJIA) and S&P 500 all closed at new all-time highs. The tech-heavy NASDAQ matched its all-time high set on Tuesday. For the year, the DJIA has gained 18.6%, the S&P 500 23.1% and the NASDAQ 27.1%.