US Labor Market Remains Strong while Economy Cools
Employers added 261,000 jobs in October, which exceeded expectations but also showed a softening of the labor market as economy slows down.
The U.S. labor market remains strong but is showing more signs of cooling following the Federal Reserve’s aggressive interest rate increases aimed at combating high inflation, reports the Wall Street Journal.
Excerpt from the Wall Street Journal: Employers added a seasonally adjusted 261,000 jobs in October, a robust number but the fewest since December 2020, and the unemployment rate rose to 3.7%, the Labor Department said Friday. Wage gains in October ticked up from the previous month. On an annual basis, however, wage increases have eased, a possible sign of loosening in the labor market. The report points to an economy that is gradually losing momentum following a torrid stretch of growth last year and earlier this year. Over the past three months, employers added an average 289,000 jobs a month, down from 539,000 during the same period a year ago. But that is still far more than before the pandemic. In 2019, job gains averaged 164,000 a month. U.S. stocks moved higher and bond yields rose after the jobs report was released.
According to the New York Times, job growth remained stubbornly robust in October despite higher interest rates, defying policymakers’ efforts to dampen the labor market and curb the fastest inflation in generations.
"All in all, the job market is still hot," said Daniel Zhao, an economist at the career site Glassdoor. "There’s still some cushion before we actually hit the ground."
Excerpt from the New York Times: Officials at the Federal Reserve have also been closely watching the labor market to assess whether their aggressive efforts to rein in inflation by raising interest rates are working. They have been eager to see evidence that the labor market is softening and wage growth is subsiding, but not so much that the economy tumbles into a recession. On Wednesday, the Fed raised interest rates another three-quarters of a percentage point on and signaled plans to keep raising them even as it suggested that it might slow the pace of increases. Economists have been expecting the labor market to cool as higher interest rates make it more difficult for businesses to grow. So far, however, hiring has been remarkably resilient even as other aspects of the economy, like the housing market, have slumped.
In a related story also from the New York Times, President Biden welcomed the last employment report before the midterm elections on Friday, calling it evidence that "our jobs recovery remains strong" and using the numbers to attack Republicans on the economy. Republicans sought to portray the report as a disappointment — and a sign that workers were continuing to suffer, with wage growth slowing.
Excerpt from the New York Times: In a statement, Mr. Biden said that the economy had added 10 million jobs while he has been in office, including 700,000 in manufacturing, about 137,000 more than before the pandemic. Noting that gross domestic product and incomes were rising, he took a swipe at Republicans who criticized him and his policies for driving up inflation. "While comments by Republican leadership sure seem to indicate they are rooting for a recession, the U.S. economy continues to grow and add jobs even as gas prices continue to come down," Mr. Biden said in the statement. "This was the worst jobs report of the year in terms of jobs created, the unemployment rate rose, and the labor force participation rate fell," Tommy Pigott, the rapid response director for the Republican National Committee, wrote in a statement. Mr. Biden’s comments underscore the degree to which a strong labor market has emerged as the president’s favorite talking point about the economy — even as job creation continues to defy the slowdown that the president said this spring was necessary to ensure a transition to slower, steadier growth with low inflation.