MARK-TO-MARKET: Labor market renews optimism on US economy

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%.

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