This morning’s BLS employment situation report shows the economy added 271,000 jobs in October and the unemployment rate fell slightly to 5.0 percent. Nominal wage growth also picked up, rising 2.5 percent over the year.
While this was all-in-all a solid report, policymakers should not be too hasty to act on one month of data. This promising jobs number comes on the heels of much slower growth this year than last (an average of only 199,000 a month in the first three quarters). Furthermore, the employment-to-population ratio remains where it was back in January and despite a slight increase this month wage growth remains below a reasonable target.
The Federal Reserve should keep in mind the lackluster growth we’ve seen throughout 2015 and continue to let the economy recover. They should not raise interest rates until wages rise further and for a sustained period of time, and people on the edges of the economy get jobs.