Payrolls rose by 261,000 in October, better than expected
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 for the month, while the unemployment rate rose to 3.7%, the Labor Department reported on Friday. Those payroll numbers were better than the Dow Jones estimate of another 205,000 jobs, but worse than the 3.5% jobless rate estimate.
Average hourly earnings rose 4.7% from a year ago and 0.4% for the month, indicating that wage growth is likely to continue to weigh on inflation. Annual growth met expectations, while monthly growth was slightly ahead of 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 saw solid growth, up 35,000 jobs, although the pace of growth slowed significantly from the gains reported in 2021. The group, which includes jobs in hotels, restaurants and bars along with related sectors, averaged gains of 78,000 per month this year, compared to 196,000 last year.
Ahead of the holiday shopping season, retail sales saw only a modest increase of 7,200 jobs. Wholesale trade increased by 15,000, while transportation and warehousing increased by 8,000.
The unemployment rate rose by 0.2 percentage points even as the labor force participation rate fell by one-tenth of a point to 62.2%. An alternative measure of unemployment, which includes discouraged workers and those working part-time for economic reasons, also rose to 6.8%.
Stock market futures rose after the non-farm payrolls release while Treasury yields were also higher.
The September job count was revised higher to 315,000, an increase of 52,000 from the original estimate. The number in August was reduced by 23,000 to 292,000.
The new figures come as the Fed is on a campaign to reduce inflation to an annual rate of 8.2%, according to one government benchmark. Earlier this week, the central bank approved its fourth consecutive interest rate hike of 0.75 percentage points, pulling benchmark borrowing rates to a range of 3.75%-4%.
The increases are aimed at cooling a labor market where there are still nearly two jobs for every available unemployed worker. Even at a reduced pace, job growth was well ahead of its pre-pandemic level, which saw monthly wage growth average 164,000 in 2019.
However, there are signs of cracks lately.
Amazon said Thursday it was pausing hiring for roles in its corporate workforce, an announcement that came after the online wholesaler said it was halting new hires for its corporate retail operations.
Also, Apple said it would freeze new hiring outside of research and development. Ride-hailing company Lyft said it would lay off 13% of its workforce, while online payments company Stripe said it was laying off 14% of its workforce.
Fed Chairman Jerome Powell on Wednesday characterized the labor market as “overheated” and said the current pace of wage growth is “well above” what would be consistent with the central bank’s 2 percent inflation target.
“Demand remains strong,” said Amy Glaser, senior vice president of business operations at Adecco, a recruiting and staffing firm. “Everyone expects that at some point we will start to see a shift in demand. But for now, we continue to see the labor market defy the law of supply and demand.”
Glaser said demand is particularly strong in warehousing, retail and hospitality, the sector hardest hit by the pandemic.
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