Job growth was stronger than expected in October, despite the Federal Reserve raising interest rates aimed at slowing a still-strong labor market.
Nonfarm payrolls rose by 261,000 in the month, while the unemployment rate rose to 3.7%, the Labor Department said Friday. Those pay numbers were better than the Dow Jones estimate of 205,000 more jobs, but worse than the 3.5% jobless rate estimate.
Average hourly earnings rose 4.7% from a year earlier and 0.4% for the month, suggesting that wage growth is still likely to put pressure on inflation. Year-on-year growth met expectations, while monthly earnings slightly beat estimates of 0.3%.
Health care led the job gains, adding 53,000 jobs, while professional and technical services contributed 43,000 and manufacturing rose 32,000.
Leisure and hospitality also posted solid growth, up 35,000 jobs, although the pace of growth slowed considerably from the gains seen in 2021. The group, which includes jobs in hotels, restaurants and bars along with related sectors, is growing by an average of 78,000 a month. this year compared to 196,000 last year.
In the pre-Christmas shopping season, the retail industry saw only a slight increase of 7,200 jobs. Wholesale added 15,000, shipping and warehousing added 8,000.
The unemployment rate rose 0.2 percentage points, even as the labor force participation rate fell a tenth of a point to 62.2%. The alternative unemployment rate, which includes discouraged workers and those holding part-time jobs for economic reasons, also rose slightly to 6.8%.
Stock market futures rose after the nonfarm payrolls releasewhile treasury yields were also higher.
September jobs were revised higher to 315,000, up 52,000 from the original estimate. The August figure fell by 23,000 to 292,000.
The new numbers come as the Fed is campaigning to lower inflation running at an annual rate of 8.2%, according to one government gauge. Earlier this week, the central bank approved a fourth consecutive interest rate hike of 0.75 percentage points, pushing benchmark interest rates to a range of 3.75% to 4%.
These increases are partly aimed at cooling the labor market, where there are still nearly two jobs for every available unemployed worker. Even with the reduced pace, job growth was well ahead of pre-pandemic levels, when monthly wage growth averaged 164,000 in 2019.
However, recently there are signs of cracks.
Amazon announced on Thursday that it was suspending hiring for positions in its corporate workforce, an announcement that came after the online retail behemoth said it was halting new hiring for corporate retail jobs.
Also, Apple he said he would freeze new hires except for research and development. Riding company Lyft announced it would lay off 13% of its workforce, while online payments company Stripe said it would lay off 14% of its workforce.
The chairman of the Fed Jerome Powell on Wednesday characterized the labor market as “overheated” and said the current rate of wage growth is “significantly above” what would be consistent with the central bank’s 2% inflation target.
“Demand is still strong,” said Amy Glaser, Adecco’s senior vice president of business operations for staffing and recruiting. “Everyone assumes at some point we’ll start to see a shift in demand. But for now, we’re still seeing the labor market defy the law of supply and demand.”
Glaser said demand is particularly strong in warehouses, retail and hospitality, the sector hardest hit the Covid pandemic.
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