No one knows how tomorrow's October jobs report will affect Federal Reserve policymakers' views about whether to start raising interest rates in December. But here are some things to consider in assessing whether the job market is making the "continued progress toward maximum employment" that the Fed wants to see.
The nation's payrolls rose by only 142,000 last month, and job gains for July and August were revised down by 59,000, suggesting the pace of job growth has slowed in recent months. Analysts were expecting job growth of around 200,000, and the question is how much should it change our views about underlying labor market conditions?
Today's lackluster employment report shows that despite substantial job market improvements over the last year or so, the Federal Reserve should not yet start raising interest rates to prevent the economy from overheating and producing unacceptable inflation. There's still too much labor market "slack" for the Fed to shift its chief concern to the risk of too much inflation.
Job creation is proceeding at a good pace, and unemployment and underemployment are falling, but wage growth has been anemic and far from what would indicate an overheating economy. That means the Federal Reserve should stay patient and let the labor market continue to heal before starting to raise interest rates.