WASHINGTON, (Reuters) – U.S. job growth surged in October and the unemployment rate hit a 7-1/2-year low of 5.0 percent in a show of economic strength that makes it much more likely the Federal Reserve will raise interest rates in December.
Nonfarm payrolls increased 271,000 last month, the largest rise since December 2014, the Labor Department said on Friday. In addition, average hourly earnings rose a respectable 9 cents.
The unemployment rate now stands at its lowest level since April 2008 and is in a range many Fed officials see as consistent with full employment.
Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin, called the jobs growth figure “astounding.”
“It’s pretty clear that the Fed would be justified in hiking in December if the economy doesn’t hit another air pocket,” Jacobsen said.
The reaction in financial markets was swift and sharp.
Prices for U.S. Treasuries plummeted, pushing yields higher, and the dollar rose to a 6-1/2-month high against a basket of currencies as investors braced for higher borrowing costs. U.S. stocks were trading lower.
