The impact of the Hurricanes in August and September, and the bounce back in October, makes it difficult to gauge current employment trends, but it is clear that the labor market continues to tighten. The unemployment rate dipped to 4.1 percent, the lowest rate since December 2000. More importantly, the broad measure of labor market slack, U6, which was slower than the unemployment rate to recover, reached 7.9 percent in October, equaling the pre-recession low. The labor force participation rate dropped to 62.7 percent, further suggesting that higher labor force participation is unlikely to be a significant solution to the growing shortage of workers.

Employment increased by 261,000 jobs in October after increasing by just 18,000 jobs in September. In the past three months, average job growth was 162,000, suggesting that the gradual slowdown in job growth continues. The US economy has been growing at a faster pace in recent quarters, yet this has not been leading to faster employment growth. In a tight labor market, employers are struggling to fill positions and therefore are attempting to meet demand by raising the productivity of their existing workers through increased investment. 

The employment report today is unlikely to deter the Fed from raising the federal funds rate next month.