US jobs report crushes expectations, unemployment rate plunges to 7-year low

The October jobs report was a huge beat.

Data out Friday morning showed the US economy added 271,000 jobs in October, and the unemployment rate dropped to 5%.

That unemployment rate is now at the lowest level since April 2008, and economists consider this level to indicate full employment.

Average hourly earnings grew 0.4% month-on-month, better than forecast.

The report had been expected to lift the pace of jobs growth from the unexpected slump we saw over the last two months.

On Wednesday, Fed chair Janet Yellen reiterated that a rate hike next month was “a live possibility”, if economic data point to a stronger labour market and rising inflation.

And so, this jobs report was being closely watched because it would indicate how close the labour market is to achieving the Fed’s goals.

Ahead of the jobs report, stock futures were little changed, and the dollar was just under the highest level in a decade.

Here’s what Wall Street expected, via Bloomberg:

  • Nonfarm payrolls: +182,000
  • Unemployment rate: 5%
  • Average hourly earnings month-on-month: 0.2%
  • Average hourly earnings year-on-year: 2.3%
  • Average weekly hours worked: 34.5
  • Change in manufacturing payrolls: -4,000

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