Employers added 150,000 jobs in October on a seasonally adjusted basis, the Labor Department said Friday.
The increase was slightly below what economists had forecast, but not much different from the kind of monthly job growth the U.S. economy was experiencing before the pandemic.
The unemployment rate, based on a household survey, rose to 3.9 percent from 3.8 percent in September. It has been below 4 percent for almost two years, a level that has not been reached since the late 1960s.
Figures for August and September were revised downward by a total of more than 100,000 from previous reports. September’s surprisingly strong gain, initially reported as 336,000, was restated at 297,000 and will be revised again next month.
“This is a little worrying, but for now they are still solid numbers,” said Sonu Varghese, chief market strategist at Carson Group, an asset management firm. “I think this is still just normalization.”
Average hourly earnings rose 0.2 percent from the previous month, slightly less than expected, and were 4.1 percent higher than a year earlier, slightly beating forecasts.
October’s numbers may have remained low because the survey was conducted during major work stoppages, particularly United Automobile Workers strikes and related layoffs. The UAW has since reached tentative contract agreements with the three major U.S. automakers and told striking members to return to their jobs.
Some 96,000 people reported being out of work due to a strike or labor dispute in October, the most since 1997.
Claudia Sahm, an economist at the Federal Reserve from 2007 to 2019 and the architect of a reliable recession indicator, said the report did not suggest “a good direction” for the labor market. But she added that unemployment would have to increase over a longer horizon for it to be clear that recession risks have increased.
Throughout the year, the economy has defied forecasts of a slowdown, even as inflation persisted, reducing consumer confidence and, to some extent, business confidence.
The economy has also seen a tremendous bifurcation in recent years, with median household net worth rising while the poverty rate has risen again from its lows in 2021. This is partly because the bottom third of Households have exhausted savings accumulated during the pandemic and increased debt to stay afloat.
A gigantic interest rate increase implemented by the Federal Reserve from early 2022 looms over vulnerable borrowers and businesses as winter approaches.
Still, many market analysts told their clients Friday that unless a major shock occurs (or household savings are depleted faster than expected), the economy could continue to advance, albeit at a faster pace. slow.
After nearly two years of lagging inflation, recent wage increases have on average outpaced the pace of price increases and there is still demand for workers. Layoffs, for now, are well below historical averages. And workforce productivity measures have also made impressive gains in recent months.
“A rock-solid U.S. labor market is advancing, albeit at a moderate pace,” said Joe Brusuelas, chief economist at accounting firm RSM, countering a sense of lingering pessimism. “Income growth continues to outpace inflation, which bodes well for consumption ahead of the traditional Christmas spending season.”
On a more technical level, Brusuelas added, the report “reaffirms the direction of monetary policy” of the Federal Reserve, which has recently been cautious about raising rates further. Financial markets rallied on the news.
Last fall, a large majority of economists in major surveys had a high level of confidence that a recession was coming. This fall, forecasts for next year are more varied.
In a CNBC poll of economists, Wall Street strategists and market analysts, 49 percent said they still expected a recession in the next 12 months, while 42 percent predicted a “soft landing,” in which the Inflation continues to cool without a broad contraction.