We shouldn't get too excited about one month of jobs data, but surely we're allowed a moment of glee right now.
Friday's fantastic nonfarm payroll gain of 271,000 marks the 61st month in a row of job growth, but more importantly, year-over-year wage growth at last hit 2.5%, meaning employers started to put money where their needs are in terms of employees. We know that employers have been increasing benefits to try and lure workers off the sidelines. But we also know that workers care most about compensation, and so a long-term strong labor market should show wage growth.
More people working supports stronger GDP growth, which is ultimately what we want to see bump up after more than six years of an economic recovery that has been lackluster.
One month does not mean we're heading to 4% GDP growth in 2016. But it does show us that we may not be as close to another economic dip that had been starting to lurk in the shadows.
There are of course continued challenges to the economic outlook. They include fewer jobs in the energy industry, a strong dollar hurting exports and a slowdown in China. During third-quarter earnings season we've seen a lot of companies announcing job cuts in part due to some of these issues.
But another real concern has been tightness in the labor market for both high-skill jobs, such as health care and information technology, and sectors such as fast food and retail. Friday's jobs report at last points us in the right direction for filling these roles, which shows there may be some punch left in this economy yet.
If the Federal Reserve does move in December, which is looking likely, there will be repercussions for various sectors of the economy. But the economy can adjust.
Previously, it had looked like the U.S. economy wouldn't be all that strong when the Fed made its first rate hike. These job numbers make the economy look much stronger.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.