Get Ready for a Rate Hike

The US economy added 271,000 jobs in October, and strong hiring drove unemployment down to 5%. The numbers were much stronger than analysts expected and could lead the Federal Reserve to raise borrowing rates for the first time in nearly a decade.


If the Fed does make a move higher, it means greater borrowing costs for businesses and individuals. In addition, a rise in interest rates could cause stock markets around the world to slide—not necessarily a bad thing, considering this bull has been on the run since March, 2009. 


Only 3,000 of those 271,000 new jobs came from the public sector, the government said. The gains far exceeded anything that analysts expected, one consensus predicted 180,000 new jobs, and nearly every major industry boosted payrolls. The unemployment rate, meanwhile, fell to 5% from 5.1%, marking the lowest level since April 2008. More people also entered the labor force in search of work, a sign that jobs are available.


Moreover, hourly pay rose at the fastest year-over-year pace since the end of The Great Recession. Economists have been expecting a faster increase in pay amid a deep drop in unemployment and the creation of millions of new jobs during the past several years.