October jobs report: Economy adds 150,000 jobs

October jobs report: Economy adds 150,000 jobs

Economy

The economy added 150,000 jobs in October. AP Photo/Seth Wing, file

The country’s employers trimmed their hiring in October, adding a modest but still decent 150,000 jobs, a sign that the labor market remains resilient despite economic uncertainty and rising interest rates that have made borrowing much more expensive for businesses and consumers.


Job growth last month, although down sharply from a strong gain of 297,000 jobs in September, was strong enough to indicate that many companies still want to hire and that the economy remains strong.

Economists say United Auto Workers strikes against automakers in Detroit will likely cut October job gains by at least 30,000 jobs. The strikes ended this week with tentative settlements in which companies awarded much better wages and benefits to union workers.

The unemployment rate rose from 3.8% to 3.9% in October.


Wage pressures, which had gradually slowed, continued to ease in October. Average hourly earnings rose 0.2% from September and 4.1% from the previous 12 months. The year-on-year wage increase was the lowest since June 2021; The month-on-month rise was the smallest since February 2022.

The government’s jobs report on Friday comes as the Federal Reserve evaluates incoming economic data to determine whether it will leave its key interest rate unchanged, as it did this week, or raise it again as it seeks to curb inflation. The slowdown in wage increases last month, coupled with lower job gains, may help convince the Fed that inflation pressures will continue to ease and that further rate hikes may not be needed.

The Fed has raised its benchmark interest rate 11 times since March 2022 to try to slow the economy, cool hiring and tame inflation, which reached a four-decade high last year but has slowed sharply since then. In September, consumer prices rose 3.7% from a year earlier, down significantly from the yearly high of 9.1% in June 2022, but still well above the Federal Reserve’s target level of 2%.

The US labor market remained afloat despite rising interest rates and helped boost consumer spending, the main driver of the economy. Employers have now added 225,000 quality jobs per month over the past three months.

The number of people in the labor force — those who have or are looking for a job — fell by 201,000 in October, the first decline since April. This could be disappointing news for the Fed. Over the past year, more than 3 million people entered the labor market, making it easier for companies to find workers. This has reduced the pressure on employers to raise wages and pass on higher labor costs to their customers through higher prices. But this trend was broken last month.

Fed policymakers are trying to calibrate its key interest rate to cool inflation, support job growth and stave off a recession at the same time. Despite longstanding expectations by economists that increasingly high interest rates by the Federal Reserve would lead to a recession, the US economy, the largest economy in the world, remains solid. From July to September, the country’s gross domestic product — the output of all goods and services — rose at an annual rate of 4.9%, the fastest quarterly growth in more than two years.

Companies are still looking to hire. On Wednesday, the Labor Department reported that employers posted 9.6 million job openings in September, a slight increase from August. The opening rate is down significantly from the March 2022 record of 12 million, but is still high by historical standards: Before 2021 and the economy’s strong recovery from the COVID-19 recession, monthly job openings had never exceeded 8 million. There are now an average of 1.4 jobs available for every unemployed American.

The combination of a strong economy and slowing inflation has raised hopes that the Fed can achieve a so-called soft landing, that is, raise interest rates enough to tame inflation without pushing the economy into recession.

Adding to the optimism is the influx of people into the labor market, due to rising wages, lower health risks resulting from the Coronavirus (Covid-19) and child care struggles resulting from school closures due to the pandemic. Migration has also rebounded after falling at the height of the pandemic.

Over the past year, more than 3.3 million people got or started looking for jobs. Having a greater number of job applicants to choose from reduces the pressure on companies to raise wages.

The Fed’s decision this week to leave interest rates unchanged for the second time in a row will give policymakers time to assess the cumulative effects of previous interest rate hikes. Many economists say they think the Fed is done raising interest rates for now.

However, Federal Reserve Chairman Jerome Powell, in a press conference on Wednesday, warned that any evidence that the economy is too hot “or that the tightness in the labor market is no longer abating” could hinder further progress in inflation and justify additional interest rate hikes. .

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