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U.S. job growth rebounded sharply in October and wages recorded their largest annual gain in 9½ years, pointing to further labour market tightening that could encourage the Federal Reserve to raise interest rates again in December.

The Labor Department’s closely watched monthly employment report on Friday also showed the unemployment rate steady at a 49-year low of 3.7 per cent as 711,000 people entered the labour force in a sign of confidence in the jobs market.

Sustained labour market strength could ease fears about the economy’s health following weak housing data and stalling business spending. U.S. President Donald Trump cheered the robust report, which came less than a week before the midterm elections that will decide who controls the U.S. Congress.

“These are incredible numbers,” Mr. Trump tweeted.

Nonfarm payrolls increased by 250,000 jobs last month as employment in the leisure and hospitality sector bounced back after being held down by Hurricane Florence, which drenched North and South Carolina in mid-September.

There were also big gains in manufacturing, construction and professional and business services payrolls. Data for September was revised to show 118,000 jobs added instead of the previously reported 134,000.

Economists polled by Reuters had forecast payrolls increasing by 190,000 jobs in October, and the unemployment rate unchanged at 3.7 per cent. The Labor Department said Hurricane Michael, which struck the Florida Panhandle in mid-October, “had no discernible effect on the national employment and unemployment estimates for October.”

Average hourly earnings rose five cents, or 0.2 per cent, in October after advancing 0.3 per cent in September. That boosted the annual increase in wages to 3.1 per cent, the biggest gain since April, 2009, from 2.8 per cent in September.

Employers also increased hours for workers last month. The average workweek increased to 34.5 hours from 34.4 hours in September.

“The report shows a booming U.S. economy with a sufficient whiff of wage inflation to keep the Fed on track to raise rates in December and at least twice next year,” said David Kelly, chief global strategist at JPMorgan Funds in New York.

Strong annual wage growth mirrors other data published this week showing wages and salaries rising in the third quarter by the most since mid-2008. Hourly compensation also increased at a brisk pace in the third quarter.

Firming wages support views that inflation will hover around the Fed’s 2.0 per cent target for a while. The personal consumption expenditures price index, excluding the volatile food and energy components which is the Fed’s preferred inflation measure, has increased by 2.0 per cent for five straight months.

The Fed is not expected to raise rates at its policy meeting next week, but economists believe October’s strong labour market data could see the U.S. central bank signal an increase in December. The Fed raised borrowing costs in September for the third time this year.

U.S. stocks were trading mostly lower and the dollar was slightly weaker against a basket of currencies on Friday. Prices of U.S. Treasuries were lower.

Employers, scrambling to find qualified workers, are boosting wages. There are a record 7.14 million open jobs.

Online retail giant Amazon.com Inc. announced last month that it would raise its minimum wage to $15 per hour for U.S. employees starting in November. Workers at United States Steel Corp are set to receive a hefty pay rise also.

Employment gains have averaged 218,000 jobs per month over the past three months, double the roughly 100,000 needed to keep up with growth in the working-age population.

That is seen supporting the economy through at least early 2019, when gross domestic product is expected to significantly slow as stimulus from the White House’s $1.5 trillion tax-cut package fades.

The labour force participation rate, or the proportion of working-age U.S. citizens who have a job or are looking for one, increased two-tenths of a percentage point to 62.9 per cent last month.

A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, fell to 7.4 per cent last month from 7.5 per cent in September. The employment-to-population ratio rose two-tenths of percentage point to 60.6 per cent, the highest since January, 2009.

Last month, employment in the leisure and hospitality sector increased by 42,000 jobs after being unchanged in September. Retail payrolls rose by only 2,400, likely restrained by layoffs related to Steinhoff’s Mattress Firm bankruptcy as well as some store closures by Sears Holdings Corp.

Construction companies hired 30,000 more workers in October. Jobs in the sector have been increasing despite weakness in the housing market. Government payrolls also increased by 4,000 jobs in October.

Manufacturing employment increased by 32,000 jobs in October after adding 18,000 positions in September. Job gains in the sector, which accounts for about 12 per cent of the U.S. economy, could slow after a survey on Thursday showed that a measure of factory employment fell in October.

So far, manufacturing hiring does not appear to have been affected by the Trump administration’s protectionist trade policy, which has contributed to capacity constraints at factories. The United States is locked in a bitter trade war with China as well as tit-for-tat tariffs with other trade partners, including the European Union, Canada and Mexico.

Despite the protectionist measures, the trade deficit continues to deteriorate. In a separate report on Friday, the Commerce Department said the trade gap increased 1.3 per cent to $54.0 billion in September, widening for a fourth straight month.

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