The Labor Department reported the unemployment rate fell to 4.1 percent in October, another new low for the recovery. The establishment survey showed the economy created 261,000 jobs in the month. The high number is due to a bounce-back from the hurricane-affected growth in September, which has now been revised up to show a small gain of 18,000. The average growth rate for the last three months is 162,000.

The bounce-back from the hurricane also had a large effect on the wage data. Last month's reported 12 cent gain in average hourly wages was heavily impacted by the hurricane. Many new hires in low-paying jobs did not take place and lower-paid hourly workers likely saw their time on the job reduced, thereby raising the overall average. The October data showed a 1 cent decline in the average wage. Nonetheless, wages are still rising at a 2.4 percent rate over the year, which is a bit less than a percentage point above the inflation rate. This puts wage growth in line with productivity growth over the last year, although it means that we are still not seeing any evidence of acceleration even as the market has tightened.

Other data in the report are mixed. The fall in the unemployment rate was associated with a drop in labor force participation. The employment-to-population ratio fell by 0.2 percentage points, partly reversing a 0.3 percentage point jump in September. On the other side, there was a sharp drop in involuntary part-time employment to 4,753,000, bringing this measure down to pre-recession levels. We also see that less-educated workers continue to be big gainers from the tight labor market. The unemployment rate for workers with just a high school degree fell to 4.3 percent, 1.2 percentage points below its year-ago level. The unemployment rate for workers without a high school degree fell to 5.7 percent, 1.7 percentage points below its year-ago level.

In short, the labor market is continuing to improve, but there is no basis for concerns that excessive wage growth will lead to an inflationary spiral. Workers are now seeing respectable wage gains that give them their share of productivity growth, but there is much ground to regain.