US Economy Added 261,000 New Jobs in October as Hiring Stays Strong
US Economy Added 261,000 New Jobs in October as Hiring Stays Strong

By Andrew Moran

The U.S. economy added 261,000 new jobs in October, down from the upwardly revised 315,000 in September, according to the Bureau of Labor Statistics (BLS). This topped the market estimate of 200,000.

The unemployment rate ticked up to 3.7 percent last month, up from 3.5 percent in September. The labor force participation rate edged down from 62.3 percent to 62.2 percent.

Average hourly earnings eased to 4.7 percent year-over-year, down from 5 percent. This was in line with market expectations. Average weekly hours were unchanged at 34.5.

Employment gains were broad-based, driven by health care, professional and technical services, leisure and hospitality, and manufacturing sectors.

In other labor trends in October, the number of people who held two or more jobs declined to 7.496 million. The number of people employed part-time and who would have preferred full-time employment remained high at 3.7 million. The number of people who were not in the labor force but want a job held steady at 5.7 million.

The financial markets initially erased their gains in pre-market trading, but they turned positive, with the leading benchmark indexes posting a modest rally.

The U.S. labor market data had been mixed heading into the October jobs report.

Earlier this week, the number of new job openings increased to 10.7 million in September, up from 10.28 million in August, according to the BLS.

The number of people who quit their jobs eased slightly to 4.06 million in September, down from 4.18 million.

Many American companies, however, anticipate an economic slowdown in the fourth quarter, raising concerns about a wave of layoffs in the coming months.

Data from Challenger, Gray & Christmas found that U.S.-based firms announced 33,843 job cuts in October, up 13 percent from September. It was also the highest reading since February 2021, driven by tech firms, services, and warehousing. In the first ten months of 2022, employers announced nearly 244,000 job cuts.

“We are beginning to see more job cut activity in the fourth quarter, historically when the bulk of cuts occur, as companies finalize budgets and plans. Many companies are anticipating a downturn, and with a still-tight labor market and the Fed’s rate hikes, more cuts will be on the way as we enter 2023,” said Andrew Challenger, senior vice president of Challenger, Gray & Christmas, in a statement.

Meanwhile, private businesses added 239,000 new jobs in October, according to payroll processing firm ADP, which was higher than expected.

“This is a really strong number given the maturity of the economic recovery, but the hiring was not broad-based,” said Nela Richardson, the chief economist at ADP, in a statement (pdf). “Goods producers, which are sensitive to interest rates, are pulling back, and job changers are commanding smaller pay gains. While we’re seeing early signs of Fed-driven demand destruction, it’s affecting only certain sectors of the labor market.”

Initial jobless claims fell to 217,000 for the week ending Oct. 29, under the market consensus of 220,000, the Department of Labor reported (pdf). Continuing jobless claims increased by 1.49 million, while the four-week average, which strips week-to-week volatility, slipped to 218,750.

Will the Fed Kill Jobs?

Fed policymakers have been rapidly raising interest rates this year in an attempt to slow the economy and keep inflation under control. They believe that a cooling labor market with moderate wage gains will lessen some of the pressure on consumer prices.

Some market experts think that unemployment will start to pick up following the Fed’s fourth 75-basis-point rate hike at the November Federal Open Market Committee (FOMC) policy meeting.

“The chances of a sharp rise in unemployment in the U.S. over the coming year are high,” said Jill Gonzalez, a WalletHub analyst, in a report. “The unemployment rate was expected to average 3.7% this year before rising to 4.4% and 4.8% in 2023 and 2024, respectively. That number has not been reached yet, so we should expect it fairly soon. Once unemployment does start to rise, the Fed should be able to pull back on its aggressive rate increases.”

But not everyone agrees, especially heading into the rest of the fall and winter.

“As we head into the rest of fall and winter, employer demand will likely stay elevated for seasonal and hourly workers, specifically in the retail industry,” said Cody Harker, head of data and insights, from Bayard Advertising, a recruitment marketing company, in a statement. “And given the ongoing imbalance between employer demand and worker supply, companies must bridge the gap and meet the needs of job seekers: from offering sign-on bonuses and competitive pay to perks like flexible work scheduling.”

Meanwhile, in a letter sent to Fed Chair Jerome Powell (pdf), Democratic senators, including Sen. Elizabeth Warren (D-Mass.), asked how many job losses should the American people brace for in the coming months.

“We are writing to express concern and request additional information about the implications of the Federal Reserve’s (Fed’s) most recent economic projections, its intention to continue raising interest rates at an alarming pace, and your disturbing warning to American families that they should expect ‘pain’ over the coming months as the Fed takes ‘forceful and rapid steps’ to ‘get supply and demand back into alignment … by slowing the economy,’” they wrote.

Powell will have until Nov. 14 to respond to the letter.

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