() — The US economy added 261,000 jobs in October and the unemployment rate rose to 3.7%, according to the latest monthly employment survey from the Bureau of Labor Statistics released Friday morning.
Total job gains were lower than September’s revised figure of 315,000, and higher than the 200,000 forecast of economists surveyed by Refinitiv.
Economists had expected a smaller rise in the unemployment rate, to just 3.6%. Still, it’s a low number by historical standards: September’s 3.5% hit a half-century low.
The report is the last major data on the economy before the midterm elections, and it reflects that the Fed’s efforts may be paying off.
While October’s 261,000 new jobs are the smallest monthly job gain for the US economy since December 2020, it’s also a solid gain by historical standards. The economy added an average of 183,000 jobs per month over the course of the decade before the pandemic.
The US labor market has remained very strong despite growing recession fears by many economists and efforts by the Federal Reserve to slow the pace of economic growth as a way to combat higher prices.
Fed Chairman Jerome Powell has warned that the economy may need to shed jobs if inflation pressures are to be brought under control, but so far the Fed’s large interest rate hikes have not stopped Employers keep hiring. Continued strength in the labor market could leave the door open for the Fed to continue raising rates at its next meetings.
Several economists said Friday they believe the Fed could slow rate hikes to half a percentage point, rather than the three-quarter point increases it has been approving in recent meetings.
“The bottom line here is that the labor market is weakening, but it hasn’t yet reached the point where the data tells the Fed to stop tightening,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “But if these trends continue, as we expect, the markets will begin to pressure the Fed, and especially Chairman Powell, to reconsider the idea of continuing hikes next year.”
The jobs report was hailed as good news by Labor Secretary Marty Walsh.
“Obviously 261,000 jobs is an excellent number,” he told in an interview Friday morning after the jobs report was released. However, he noted that while total employment is now above pre-pandemic levels, there are still some sectors, such as entertainment and hospitality, and public schools, where employment has not yet returned to levels. prior to the pandemic.
However, he acknowledged that even with a strong job market, it’s high prices, not jobs, that most Americans worry about.
“No matter how many jobs it is, I can stand in front of this camera and say how many we’ve put together and how great they are, but people will still feel like the battle is on their kitchen table,” he said. The Biden administration is working to address rising prices with its Inflation Reduction Act, he added.
In addition to employment totals, another key metric the Fed focuses on is wage growth, as higher wages can create inflationary pressure by putting more money in the hands of consumers and increasing demand for goods and services. services.
The October jobs report showed a slowdown in wage gains, with the average weekly wage paid by businesses increasing by just 3.8%, from September’s 4.1% annual gain; Far from gains of 5% or more recorded earlier this year and through many months of 2021.
Even when wage growth was 5%, that didn’t keep pace with price increases paid by consumers, which averaged 8.2% according to the most recent Consumer Price Index. The slower pace of wage increases in this report indicates that it will be even harder for consumers to pay high prices.
This is a developing story and will be updated.
