Job gains in the US topped expectations in October, as hiring rose at a solid pace, even as the unemployment rate edged up, according to the closely-watched US employment report today. US employers added more jobs than expected last month while wages rose firmly, underscoring the resilience of the labour market despite the Federal Reserve’s aggressive efforts to cool it down.
Employers added 2,61,000 workers last month, far higher than economists had forecast, following an upwardly revised 3,15,000 gain in September, while the jobless rate rose two-tenths to 3.7%, the Labor Department said. There were notable job gains in health care, professional and technical services, and manufacturing, the report said.
How jobs, as well as unemployment, are rising in the US
Those figures were derived from a survey of businesses while the statistics for households painted a weaker picture with higher joblessness. The unemployment rate increased by 0.2 percentage points to 3.7%, more than forecast, as participation edged lower. Average hourly earnings accelerated from the prior month.
The median estimate in a Bloomberg survey of economists called for a 1,93,000 advance in payrolls and for the unemployment rate to edge up to 3.6%.
The increase in the number of jobs was relatively broad-based, with categories like healthcare, professional and business services and manufacturing posting solid increases. The report suggests demand for workers remains robust despite rapid interest-rate hikes and a darkening economic outlook. Layoffs, while rising, are still historically low, and competition to fill millions of vacant positions has driven rapid wage gains.
While that’s helped underpin consumer spending — the engine of the economy — it is also made the US Federal Bank’s efforts to cool inflation more difficult and suggests the central bank will maintain its resolute tightening campaign in the months ahead.
Fed officials have repeatedly emphasized that in order to meet their inflation goal, they need to bring labour supply and demand more into balance. Chair Jerome Powell, speaking after the central bank raised rates by another 75 basis points two days ago, said that job-market conditions haven’t softened yet in an “obvious” way.
Treasury yields rose, while S&P 500 index futures remained higher and the dollar fell slightly. Traders are still leaning toward a downshift in the Fed’s pace of tightening to 50 basis points in December.
Looking ahead, the most aggressive Fed tightening since the 1980s is set to weigh on hiring. While Powell described the labour market as “very, very strong,” he also said it takes time for higher interest rates to work through the economy. Powell voiced hope that could come about mainly through a drop in vacancies rather than via outright job losses.
The figures also represent the last hallmark economic report ahead of the midterm elections next week. The economy has consistently ranked among voters’ top priorities this cycle and will likely be a key factor in whether Republicans take control of the House, Senate or both. President Joe Biden has repeatedly emphasized the strength of the job market in an effort to show that the economy remains on strong footing despite decades-high inflation and an impending recession.
The report showed average hourly earnings were up 0.4% from September and were up 4.7% from a year earlier. Even so, many workers’ wages are not keeping up with inflation, something that’s started to have an impact on consumer behaviour.
So far, Americans have largely held up in the face of persistently high inflation, but many families are tightening their belts. Credit card companies including Mastercard Inc. and Visa Inc. saw spending slow in the latest quarter, and Amazon.com Inc. is projecting the slowest holiday-quarter growth in its history.
Sectors like tech and real estate, which are more sensitive to interest-rate hikes, are already feeling the pinch of tighter Fed policy. Apple Inc paused hiring for many jobs outside of research and development while Amazon has effectively stopped recruiting for new roles companywide. Meantime, Opendoor Technologies Inc. and Zillow Group Inc. have let staff go amid a deep slide in the housing market.