The U.S. economy added a robust 250,000 jobs in October, capping a string of strong monthly gains that have helped lower the unemployment rate to a five-decade low of 3.7 percent.
The Labor Department’s report Friday also showed that average hourly earnings rose 3.1 percent from a year earlier, the biggest annual gain since 2009. The report showed that the economy is still expanding at a solid pace despite fears that a trade war and other headwinds could slow growth.
The job gains last month were led by gains in professional and business services, health care, construction and transportation. Manufacturing employment rose by a modest 3,000 jobs.
The overall picture is one of an economy that continues to expand at a moderate pace, with employers hiring at a solid clip and workers seeing bigger paychecks.
“This is a very strong jobs report, with broad-based gains across sectors and industries,” said Mark Zandi, chief economist at Moody’s Analytics. “The job market is on fire.”The U.S. economy grew at a solid pace in the first quarter as businesses stepped up investment and consumers continued to spend, though growth appears to have moderated in the current quarter amid headwinds from trade tensions and slower global growth.
The Commerce Department said on Friday gross domestic product increased at a 3.2 percent annualized rate in the first quarter, unrevised from the last estimate. That was in line with economists’ expectations.
The economy grew at a 2.2 percent pace in the fourth quarter.
The government also reported that after-tax corporate profits rose at a 4.7 percent rate in the first quarter, the fastest pace in a year. Profits had declined in the fourth quarter.
The first-quarter growth performance was driven by a surge in business investment, which was the biggest contributor to growth in nearly four years. Investment in equipment jumped at a 10.7 percent pace, the fastest in nearly three years.
There was also a big rebound in spending on structures, which had declined for four straight quarters.
Investment in nonresidential structures, such as office buildings, factories and pipelines, soared at a 21.1 percent rate, the biggest increase since the first quarter of 2015.
Spending on homebuilding rebounded after two straight quarters of declines.
The economy was also supported by a rise in inventory investment, which added half a percentage point to growth.
The inventory build-up could be a drag on growth in the second quarter as businesses could work off the stockpiles.
Growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, slowed to a 1.3 percent pace in the first quarter from the fourth quarter’s robust 4.0 percent rate.
The slowdown in consumer spending, which was also reported on Thursday, reflected in part a big drop in outlays on motor vehicles and parts.
Spending on services, which includes everything from healthcare to haircuts, continued to rise strongly.
The economy is being supported by a tightening labor market, which is driving up wages.
The government said after-tax incomes, adjusted for inflation, rose at a 0.8 percent rate in the first quarter. Wages and salaries, which account for more than 70 percent of employment costs, increased at a 0.9 percent pace after rising 0.6 percent in the fourth quarter.
The saving rate fell to a one-year low of 7.3 percent in the first quarter from 7.6 percent in the fourth quarter.
With incomes rising and the saving rate falling, consumers had the wherewithal to continue spending.
The economy is also being buoyed by a $1.5 trillion tax cut package and increased government spending.
The tax cuts are boosting business profits and household incomes and are also encouraging companies to invest in equipment and expand capacity.
The tax cuts are also driving up the federal budget deficit, which is on track to exceed $1 trillion this fiscal year for the first time since 2012.
The Trump administration is counting on the economy to accelerate this year and next, helping to offset the drag from the budget deficit.
The economy is facing headwinds from the Trump administration’s trade policies, which have led to an escalation in tariffs on imported goods from China and other countries.
The trade tensions could disrupt supply chains and weigh on business investment.
The economy is also being hurt by slower growth in China and Europe.
The International Monetary Fund this week lowered its global growth forecast for 2019 and 2020, citing trade tensions and slower growth in China and Europe.
The IMF now sees the world economy growing 3.3 percent this year and 3.6 percent next year, down from its January forecast of 3.5 percent and 3.6 percent, respectively.