The good news is that the US economy added 250,000 new jobs in the month, far more than expected. The bad news is that wage growth and labor force participation have both declined, indicating that the current economic expansion may be coming to an end. This has caused concern for many investors and business owners as the US economy heads into 2019.
The job market data released by the US Labor Department showed that overall non-farm payrolls rose by a quarter of a million in October. This was a major surprise as analysts had been expecting a much smaller increase of around 190,000 jobs. This marks the largest monthly job gain since July and ends a stretch of three consecutive months with declining jobs growth.
However, despite the strong job growth, there were some other less promising figures in the report. Average hourly earnings grew at a sluggish 2.8 percent, which is down from the previous year's rate of 3.5 percent. This indicates that wage growth is slowing, despite the tight labor market. Additionally, the labor force participation rate fell to 62.9 percent, its lowest level since the 1970s. This suggests that many Americans are still not taking advantage of the current economic expansion.
The release of the October job report has caused some economists to worry that the current economic expansion is on its last legs. Many feel that the slowdown in wage growth combined with the decline in labor force participation are signs that the US economy is close to reaching the peak of its growth cycle. If this proves to be true, then the US could be headed for a recession in the near future.
In summary, the October 2018 jobs report from the US Labor Department has provided mixed news. On one hand, the number of jobs added was far higher than expected, indicating that the economy is still doing well. On the other hand, wage growth and labor force participation have both declined, indicating that the economic expansion may be coming to an end. This has caused some to fear that the US economy may be headed for a recession in the near future. However, until further economic indicators are released, it is impossible to definitively say whether the US is headed for a recession or not.
This article was contributed on Dec 29, 2023
