The economic highlight of last week was the October employment report. The report confirmed the continued tightening of the labor market. During the month, 161,000 new jobs were added, which was slightly below the six month average of 179,000, and the unemployment rate declined from 5.0% to 4.9%. The most interesting portion of the report was the increase in average hourly earnings, which were up 2.8% versus an expected 2.6% year-over-year. This marks the highest level during the economic expansion. Typically rising labor costs are a sign of a tight labor market and an economy that is in the late cycle of expansion.
Given the continued tightening of the labor market, I expect the Federal Reserve to raise interest rates in December. The markets were choppy last week as election uncertainty was front and center.
Make sure you get out and vote on Tuesday!
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