Hiring stayed strong in October, with U.S. employers adding 261,000 jobs
Hiring across the U.S. continued to surge in October, highlighting that the nation's job market remains tight just days before the midterm elections.
Employers added 261,000 jobs last month, the Labor Department said on Friday, overshooting economists' expectations of about 200,000. The government also said 30,000 more jobs were created in August and September than earlier estimates.
The unemployment rate ticked up to 3.7%, from 3.5% in September, as more workers lost jobs.
"The labor market is showing tentative signs of the effects of the Fed's tightening campaign. But the dynamism and competitive nature of the jobs market shows little change in the tightness of labor," Ben Emons of Medley Global Advisors wrote in a research note.
Hiring was broad-based, with professional and business services adding 39,000 jobs, manufacturing adding 32,000, leisure and hospitality adding 35,000 and government adding 28,000.
The strong job market is a rare bright spot in an economy otherwise beset by consumer worries. Polls show most Americans believe the country is in recession, while inflation remains near a 40-year high, outpacing wage growth and squeezing household budgets.
But although payrolls grew faster than expected last month, other signals in the latest employment report were less positive. The labor participation rate, a measure of workers who are employed or looking for a job, declined.
The government's monthly jobs report is derived from two separate surveys: A survey of employers that yields the payroll figure, and one of households that yields the unemployment rate. The two surveys often point to different trends, although the divergence in October was more pronounced than usual, with the household data showing a drop in employment of 328,000.
"The October employment report had something for everyone, with payrolls pointing to continued strong employment gains while the household survey showed a sharp fall in employment and a rise in unemployment," Michael Pearce, senior U.S. economist with Capital Economics, said in a report.
Some sectors are cooling
The technology sector — which for years has been an engine of job growth as well as a bellwether for other industries — is showing signs of gearing down.
Companies including Lyft and Stripe this week announced significant layoffs, while Twitter is set to downsize as Elon Musk moves to slash costs following his $44 billion purchase of the social media company. And giants such as Amazon, Google-parent Alphabet and Meta have said they plan to pull back on hiring amid slowing economic growth.
Wage growth decelerated in October, with average hourly pay growing 4.7% over the previous 12 months — down from a peak of 5.6% in March.
The slowdown is bad news for workers, whose pay is lagging the over-8% rate of inflation, but good news if it leads the Federal Reserve to pause its interest-rate-hiking plans, economists say.
"As labor demand continues to cool, the Fed should take some comfort in the fact that wage growth still lags overall inflation and is decelerating, reducing the threat of the pass-through of wages to overall inflation," David Kelly of JP Morgan Chase said in a research note.