Wages rose by 261,000 in October, better than expected

Despite the Federal Reserve raising interest rates, job growth was stronger than expected in October.

Nonfarm payrolls rose by 261,000 for the month, while the unemployment rate rose to 3.7%, the Labor Department said Friday. Those payroll numbers were better than the Dow Jones estimate for 205,000 additional jobs, but worse than the 3.5% estimate for the unemployment rate.

While the number was better than expected, it marked a slower pace of job creation after December 2020.

Average hourly earnings rose 4.7% from a year ago and 0.4% for the month, indicating that wage growth is likely to remain under pressure as labor wages are still below the rate of inflation. The monthly gain was slightly ahead of estimates of 0.3%.

Health care led the job gains, adding 53,000 positions, while professional and technical services contributed 43,000, and manufacturing increased by 32,000.

Leisure and hospitality posted solid growth, adding 35,000 jobs, although the pace of increases was significantly slower than posted gains in 2021. The group, which includes hotel, restaurant and bar jobs, earns an average of 78,000 a month. This year, compared to 196,000 last year.

During the holiday shopping season, retail sales gained just 7,200 jobs. Total trade added 15,000, while transportation and warehousing increased by 8,000.

The labor force participation rate fell by a tenth to 62.2%, while the unemployment rate rose by 0.2 percentage points. A proxy measure of unemployment, which includes discouraged workers and those holding part-time jobs for economic reasons, rose to 6.8%.

Stock market Futures rose following the release of non-farm payrollsTreasury yields were also higher.

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The September jobs number was revised up to 315,000, up 52,000 from the original estimate. August’s figure was down 23,000 to 292,000.

The new figures come as the central bank is on a campaign to reduce inflation, which is running at 8.2% a year, according to a government measure. Earlier this week, the central bank approved its fourth consecutive 0.75 percentage point interest rate hike.

Those hikes are aimed at cooling the labor market, where there are still roughly two jobs for every unemployed worker. Even with the slower pace, job growth is well ahead of its pre-pandemic level, with monthly wage growth averaging 164,000 in 2019.

But Tom Borcelli, chief U.S. economist at RBC Capital Markets, said the broader picture is one of a slowly deteriorating labor market.

“This thing doesn’t fall off a cliff. It’s a grind on a slow background,” he said. “That’s how it works every time. So it’s kind of laughable that people want to hang their hat on this lagging indicator to determine where we’re going.”

In fact, there are signs of cracks lately.

Amazon The announcement comes after the online retailer said it was cutting new hires for its corporate retail jobs after it said it would suspend hiring among its corporate employees on Thursday.

Further, Apple He said this would stifle new hires, except for research and development. Riding company Lift It announced it would cut 13% of its workforce, while online payments company Stripe said it would cut 14% of its workforce.

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Central Bank Governor Jerome Powell It characterized the labor market as “overheated” on Wednesday and said the current pace of wage gains is “very high” in line with the central bank’s 2% inflation target.

“Demand is still strong,” said Amy Glaser, senior vice president of business operations at staffing and recruiting firm Adecco. “Everyone expects that at some point we’ll start to see a shift in demand. But so far we’ve continued to see the labor market defy the law of supply and demand.”

Demand is particularly strong in warehousing, retail and hospitality, Glaser said The covid pandemic.

This is breaking news. Check back here for updates.

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