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Jobs Report: U.S. Adds 214,000 Jobs; Unemployment Rate Falls to 5.8%

Revisions Showed Economy Added 31,000 More Jobs in August, September

ENLARGE

Federal Reserve Chairwoman Janet Yellen, shown in August, has been watching the jobs numbers closely for signs of diminishing “slack.” ASSOCIATED PRESS

Nov. 7, 2014 8:34 a.m. ET

WASHINGTON—U.S. payrolls grew modestly in October but the unemployment rate fell and wages edged up, signs the labor market is strengthening.

Nonfarm payrolls grew a seasonally adjusted 214,000 last month, the Labor Department said Friday. Since the start of the year, employers have added more than 220,000 workers on average each month, a pace last consistently maintained nearly a decade ago.

Revisions showed the economy added 31,000 more jobs the prior two months than previously estimated. Employers added 256,000 jobs in September compared to an initial estimate of 248,000. The August reading was revised to 203,000 from the previously reported 180,000.

The unemployment rate, obtained from a separate survey of households, fell to 5.8% last month. That’s the lowest level since 2008.

Economists surveyed by The Wall Street Journal had expected payrolls to increase by 233,000 in October and the unemployment rate to remain 5.9%.

Friday’s report suggests demand for workers continues to strengthen modestly, a trend seen since hiring ramped up this spring.

The broader economy contracted in the first quarter during an unusually harsh winter, and then rebounded strongly during the middle of the year. Improving consumer confidence and falling oil prices could support further expansion. But China’s slowing growth, Europe flirting with recession and Middle East turmoil are raising concerns about the durability of U.S. economic gains.

Sustained economic strength in the U.S. could hinge on advancing wages. In October, average hourly earnings for private-sector workers rose 3 cents to $24.57. Earnings were up 2% compared to a year earlier, a pace just above mild inflation. Consumer prices rose 1.7% in September from a year earlier.

The unemployment rate fell, suggesting diminished slack. The labor-force participation rate rose 62.8% from 62.7% in September, but the rate remains near the lowest levels since the late 1970s. Before the recession, the rate stood at 66%.

A broader measure of unemployment--which includes involuntary part-time workers and Americans too discouraged to apply for jobs-fell by three-tenths of a percentage point to 11.5% in October. That’s down from 13.7% a year earlier, but elevated by historical standards. During last decade’s expansion, the rate hovered between 8% and 10%.

With many Americans on the sidelines of the labor market, the supply of workers could be larger than top-line figures indicate. That excess capacity could in turn hold down wages.

The health of the labor market is an important factor in the Federal Reserve’s decision on when to raise short-term interest rates from near zero, where they’ve stood since 2008. The central bank ended its bond-buying stimulus program in October. Following their latest meeting, officials noted improvement in the labor market and consumer spending, but remained concerned about the housing market and sluggish inflation.

Friday’s report showed fairly broad based jobs gains. The leisure and hospitality sector added 52,000 jobs and retailers added 27,100. But higher-wage fields also grew. Manufacturing added 15,000 jobs, and professional and business services grew by 37,000.

Government payrolls increased by 5,000 last month, led by state and local hiring. After deep cut backs in recent years, government budgets have stabilized and public spending contributed to overall economic growth for the second straight quarter this summer.