Washington: Employment in October surged by the most this year, wage growth accelerated and the jobless rate fell to 5 per cent, signs of labour-market durability Federal Reserve policymakers are looking for as they consider a year-end boost in borrowing costs.

The addition of 271,000 jobs exceeded all estimates in a Bloomberg survey of economists and followed a revised 137,000 gain in September, a Labor Department report showed Friday. The median forecast called for a 185,000 advance. Average hourly earnings climbed from a year earlier by the most since July 2009.

In the wake of sluggish job gains the prior two months, October’s advance allays concerns that an abrupt hiring slowdown would hinder the expansion’s progress as economies overseas strive to gain traction. Further improvement in the job market is a precondition for Fed officials, who last month held out the possibility of a December interest-rate increase.

“Employment growth remains strong,” Jim O’Sullivan, chief US economist at High Frequency Economics in Valhalla, New York, said before the report. “The message is: The recent slowing was exaggerated. The higher the payrolls numbers, the greater the support for the Fed to move in December.”

O’Sullivan, who projected October payrolls would exceed 200,000, added that based on other indicators, “job growth is strong.”

The report also showed diminishing labour-market slack. The number of Americans working part-time because of a weak economy fell to 5.7 million in October, the lowest since June 2008.

Prior Months

Payroll estimates of 75 economists in the Bloomberg survey ranged from gains of 75,000 to 250,000 after a previously reported 142,000 September advance. Revisions to prior reports added a total of 12,000 jobs to payrolls in the previous two months. Still, employment only averaged 145,000 in August and September.

The unemployment rate, which is derived from a separate Labor Department survey of households, is the lowest since April 2008.

Employment in October was led by the biggest gain in retail payrolls since November, the strongest hiring in construction in eight months and a pickup at temporary-help agencies. There was no change at the nation’s manufacturers.

Average hourly earnings rose by 0.4 per cent from the prior month. Worker pay increased 2.5 per cent over the 12 months ended in October, the most in more than six years, following a 2.3 per cent gain the prior month. They had been stuck around near 2 per cent on average since the current expansion began in mid- 2009.

Underemployment Rate

The underemployment rate — which includes part-time workers who’d prefer a full-time position and people who want to work but have given up looking — fell to 9.8 per cent, the lowest since May 2008.

The participation rate, which shows the share of working- age people in the labour force, held at 62.4 per cent.

Fed officials said last month that they’d consider a rate increase at their next gathering, and Fed Chair Janet Yellen this week echoed the view by saying December was a “live possibility.” One of the central bank’s preconditions for lift-off is “some further improvement” in the labour market. It next meets on Dec. 15-16, and an increase in the benchmark rate would be the first since 2006. It’s been near zero since December 2008.

American manufacturing has taken a hit with softening sales in overseas markets, a stronger dollar and oil-sector weakness depressing demand. Services, which account for about 90 per cent of the economy, are relatively shielded and faring better.