U.S. employers added a whopping 250,000 jobs last month and raised average pay at the highest rate in nearly a decade.
The Labor Department's monthly jobs report, the last major economic data before Tuesday's congressional elections, also showed that the unemployment rate remained at a five-decade low of 3.7 percent.
The influx of new job-seekers in October increased the proportion of Americans with jobs to its highest level since January 2009.
Consumers are the most confident they have been in 18 years and are spending freely and propelling brisk economic growth. The U.S. economy is in its 10th year of expansion, the second-longest such period on record, and October marked the 100th straight month of hiring, a record streak.
The resulting strength in customer demand has led companies to steadily add workers. Though economists predict that hiring will eventually slow as the pool of unemployed Americans dwindles, there's no sign of that happening yet.
The figures give Republicans another economic accomplishment to tout ahead of Tuesday’s midterm elections as they seek to defend control of Congress from what polls indicate will be Democratic gains. The continued hiring and wage increases also reflect a tax-cut boost and reinforce expectations that the central bank will raise interest rates for a fourth time this year in December, though such an outlook may further unsettle investors who just sent U.S. stocks to their worst month since 2011.
“The labor market is cookin’, and that’s the bottom line,” said Ward McCarthy, chief financial economist at Jefferies LLC. “What’s really impressive is that the unemployment rate would’ve declined if the participation rate hadn’t risen, and that’s a good thing. You still have more people coming back to the labor market. There’s a lot to like.”
The labor-force participation rate—the percentage of the population that is either employed or actively seeking work— increased to 62.9 percent from 62.7 percent the prior month.
In October, consumer confidence reached its highest point in 18 years, propelled by optimism about the job market. Last month's plunge in stock prices didn't dampen Americans' enthusiasm, though the survey was conducted in the first half of October, before the full market decline had occurred.
In the July-September quarter, consumer spending grew by the most in four years and helped the economy expand at a 3.5 percent annual rate. That growth followed a 4.2 percent annual pace in the April-June quarter. Combined, the two quarters produced the strongest six-month stretch of growth in four years.
Manufacturing output and hiring remain healthy, according to a survey by a private trade association, although increased tariffs have raised factory costs.
By contrast, housing remains a weak spot in the economy, with sales of existing homes having fallen for six straight months as mortgage rates have risen to nearly 5 percent. But slower sales have started to limit home price increases, which had been running at more than twice the pace of wage gains.
There are signs that pay growth is picking up. A measure of wage and salaries rose 3.1 percent in the third quarter from a year earlier, the best such showing in a decade.
Average hourly earnings for production and non-supervisory workers increased 3.2 percent from a year earlier, following 2.8 percent in September The average work week increased to 34.5 hours, from 34.4 hours in prior month. A shorter work week has the effect of boosting average hourly pay.
Payroll increases were broad-based, including 30,000 in construction, 32,000 in manufacturing and 179,000 in services. Retailers added 2,400 workers. Private payrolls rose by 246,000, compared with median estimate of 195,000; government payrolls increased by 4,000.
Although pay increases can help boost spending and propel the economy's growth, they can also lead companies to raise prices to cover their higher labor costs. That trend, in turn, can accelerate inflation.
So far, though, inflation remains in check. The Federal Reserve's preferred price measure rose 2 percent in September compared with a year earlier, slightly lower than the year-over-year increase in August.