Job growth was stronger than expected in October despite interest rate hikes by the Federal Reserve aimed at slowing what is still a strong labor market.
Nonfarm payrolls rose 261,000 for the month while the unemployment rate rose to 3.7%, the Labor Department reported Friday. Those payroll numbers were better than the Dow Jones estimate for 205,000 more jobs, but worse than the 3.5% estimate for the jobless rate.
Average hourly earnings rose 4.7% from a year ago and 0.4% for the month, indicating that wage growth is still likely to put pressure on inflation. The annual growth met expectations while the monthly gain was slightly above the estimate 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 posted solid growth, up 35,000 jobs, although the pace of increases slowed significantly from gains seen in 2021. The group, which includes hospitality jobs, restaurants and bars and related sectors, recorded average earnings of 78,000 per month. this year, compared to 196,000 last year.
As the holiday shopping season approaches, retail trade posted only a modest gain of 7,200 jobs. Wholesale trade added 15,000, while transportation and warehousing increased by 8,000.
The unemployment rate rose 0.2 percentage points, although the participation rate fell by a tenth of a point to 62.2%. Another measure of unemployment, which includes discouraged workers and those in part-time jobs for economic reasons, also rose slightly to 6.8%.
Stock market futures rose after the release of nonfarm payrolls, while Treasury yields were also higher.
September’s employment count was revised up to 315,000, an increase of 52,000 from the original estimate. The August number fell from 23,000 to 292,000.
The new figures come as the Fed is waging a campaign to bring inflation down to an annual rate of 8.2%, according to a government indicator. Earlier this week, the central bank approved its fourth consecutive 0.75 percentage point increase in interest rates, bringing benchmark lending rates to a range of 3.75% to 4%.
These hikes are intended in part to cool a job market where there are still nearly two jobs for every unemployed worker available. Even with the reduced pace, job growth was well above its pre-pandemic level, in which monthly payroll growth averaged 164,000 in 2019.
However, there have been signs of cracking lately.
Amazon On Thursday it announced it was suspending hiring for positions within its corporate workforce, an announcement that came after the online retail giant said it was halting new hiring for their retail jobs.
Also, Apple said it would freeze new hiring except for research and development. carpooling company Lyft announced it would cut 13% of its workforce, while online payment company Stripe said it was cutting 14% of its workforce.
Fed Chairman Jerome Powell on Wednesday called the labor market “overheated” and said the current pace of wage gains was “well above” what would be consistent with the 2% inflation target of the central bank.
“Demand is still strong,” said Amy Glaser, senior vice president of business operations at Adecco, a staffing and recruiting company. “Everyone anticipates at some point that we will start to see a shift in demand. But so far 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 Covid pandemic.
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