Hiring at American companies shifted into higher gear in October, helping to lift wages and clearing the path for the Federal Reserve to raise interest rates next month.þþThe 271,000 jump in payrolls reported by the Labor Department on Friday was much more robust than expected and suggested that the economy had enough strength to allow the central bank to begin its move away from the crisis-level interest rate policy it has been following for nearly eight years.þþFed officials were poised to raise short-term interest rates from near zero earlier this year, but they held off as economic conditions overseas worsened and domestic job growth slackened in August and September.þþBut now the underlying solidity evident in the October report is expected to strengthen the hand of monetary policy hawks who favor an increase in short-term rates, while reassuring Janet L. Yellen, the chairwoman of the Federal Reserve, and her centrist colleagues that the economy can handle modestly higher borrowing costs.þþ“It was pretty much everything you could ask for in a jobs report,” said Michelle Meyer, deputy head of United States economics at Bank of America Merrill Lynch. “Not only was the headline number strong but there were upward revisions for prior months, the unemployment rate fell and wage growth accelerated.þþ“Things could still go wrong between now and December, but the odds are better than even that the Fed will raise rates next month,” she said.þþThe unemployment rate dipped to 5 percent, from 5.1 percent in September. Average hourly earnings also bounced back, rising 0.4 percent in October after showing no increase in September; that lifted the gain to 2.5 percent over the last 12 months, the healthiest rate since 2009.þþAlong with altering the landscape for policy makers in Washington and traders on Wall Street, if the strength in the labor market in October persists, it could also shift the political debate as the 2016 presidential campaign heats up.þþA strong economy tends to favor the incumbent party in the White House, and it could blunt Republican attacks on President Obama’s economic record, which have been a mainstay of the G.O.P. candidates’ message.þþþ
Source: NY Times
