WASHINGTON _ A stronger-than-expected labor market report Friday _ highlighted by a quarter of a million new jobs and the best year-over-year wage growth in nine years _ could provide a boost to Republican candidates in the midterm elections next week but also could trigger higher interest rates.
The 250,000 net jobs created in October were well above expectations, although the figure likely included a lot of catch-up hiring after a subpar September in which payrolls expanded by a downwardly revised 118,000 positions. The unemployment rate held steady at 3.7 percent, the lowest since 1969.
The more significant news in the report released by the Labor Department was that wages hit a post-recession milestone. Average hourly earnings increased 3.1 percent for the 12-month period that ended Oct. 31. That was the best since April 2009, two months before the end of the 2007-09 recession.
"It doesn't get any better than this," said Sung Won Sohn, president of SS Economics, a Los Angeles economic consulting firm. "The healthy job report shows that the relatively low September report was a temporary setback."
Kevin Hassett, chairman of the White House Council of Economic Advisors, told Fox Business Network that Friday's jobs report was "astonishing" given expectations of lower job growth because of Hurricane Michael, which struck Florida last month.
The Labor Department's Bureau of Labor Statistics said the hurricane "had no discernible effect" on the data.
Despite the upbeat report, there were some cautions related to wages.
October's 5-cent increase in average hourly earnings brought that figure up to $27.30, but the growth was smaller for the third straight month, indicating that the stimulus from the tax cuts that took effect in January could be waning. And much of the higher wages recently are being eaten up by rising prices.
The consumer price index was up 2.3 percent year-over-year in September. That means "real earnings" _ wage growth when adjusted for inflation _ remain tepid and lag behind the gains seen in 2015-16, when inflation was much lower.
The faster annual wage growth keeps the pressure on Federal Reserve officials to continue slowly raising their benchmark short-term interest rate to prevent inflation from going too high.
President Donald Trump has sharply criticized the Fed for raising the interest rate, complaining that it will slow economic growth. The public criticism of the Fed is rare for a U.S. president, but Trump has done it frequently in recent months.
But the Fed's mandate is to maintain stable prices and maximum employment, and higher wages caused by increased competition for workers puts upward pressure on prices as Americans have more money to spend.
The Fed, which raised the federal funds rate 0.25 percentage points in September, has been expected to enact another increase in December despite Trump's criticism.
Gad Levanon, chief economist for North America at the Conference Board, a business and research group, said Friday's jobs report makes that more likely.
"Federal Reserve concerns about inflation will only grow as a result of labor market news this week," he said. "They will be more determined to continue raising rates to slow down growth and prevent labor market conditions from causing the economy to overheat and inflation from exceeding the (central) bank's target."
Overall, the jobs report was strong.
Hiring spanned all sectors. Growth of manufacturing payrolls was particularly impressive, with employers in that sector adding 32,000 net jobs in October, up from a gain of 18,000 the previous month. Health care and social services employers added 46,700 jobs, up from a gain of 34,900 in September. And the leisure and hospitality sector bounced back from a flat September, adding 42,000 jobs last month.
The civilian labor force expanded by 711,000 in October, pushing up the closely watched participation rate to 62.9 percent.
Job growth this year is averaging about 213,000 a month, up from 182,000 in 2017. This year's growth is the best since 2015, when the United States averaged 226,000 net new jobs a month.
