Payrolls jumped 261,000 in October, better than expected

Average hourly earnings rose 4.7% from a year ago and 0.4% for the month, indicating that wage growth should continue to put pressure on prices as employee compensation workers is still well below the rate of inflation. The annual growth met expectations while the monthly gain was slightly above the estimate of 0.3%.

“There have been some signs of cooling. Bur sees a pretty strong labor market,” said Elise Gould, senior economist at the Economic Policy Institute. “We have seen a substantial increase in jobs. But there has been a slowdown in the rate of increase. You would expect that as we get closer to full employment.”

Market prices have moved slightly towards a Fed rate hike of 0.5 percentage points in December, which would be less aggressive than the pace that began in June with moves of 0.75 percentage points each meeting. Traders expect the Fed to adopt another 0.5 percentage point hike in February.

Fastest growing health sector

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 showed 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 as well as 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.

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“Job gains were pretty widespread and overall wage gains are still too high,” said Marvin Loh, senior global macro strategist at State Street. “So steady as it goes from a Fed perspective, but gradually there’s reason to be a bit hopeful that we’re starting to see some of the moss coming out of the [jobs] market.”

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%.

September’s employment count was revised up to 315,000, an increase of 52,000 from the original estimate. The August number fell by 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%.

Signs of slowing down

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.

But Tom Porcelli, chief US economist at RBC Capital Markets, said the big picture is one of a slowly deteriorating labor market.

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“This thing isn’t falling off a cliff. It’s a grind in a slower context,” he said. “It works that way every time. So the fact that people want to hang their hats on this lagging indicator to figure out where we’re going is kind of laughable.”

Indeed, there have been signs of cracks lately.

Amazon On Thursday, it announced it was suspending hiring for positions among its corporate staff, an announcement that came after the online retail giant said it was halting new hiring for its 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. She added that Adecco is seeing an increase in workers looking for second jobs.

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