Though the unemployment rate ticked up to 3.7%, the labor market last month added a much stronger-than-expected 261,000 jobs—signaling that the labor market, which has remained one of the economy’s strongest pillars during the pandemic recovery, may still not be cooling quickly enough for the Federal Reserve to ease up on interest rate hikes despite growing waves of layoffs.
Job gains in October were lower than the 315,000 new jobs in September (revised up by 52,000) but much better than the 205,000 new jobs economists were expecting, according to data released Friday by the Labor Department.
Meanwhile, the unemployment rate ticked up to 3.7%—coming in higher than expectations calling for a rate of 3.6%—as the number of unemployed people climbed by 306,000 to 6.1 million.
In emailed comments, Bankrate analyst Mark Hamrick said the report is “more of a mixed bag than we’ve seen recently,” as hiring failed to keep pace with the “robust trends” of the past couple of years, but he also noted the data alone won’t sway the Fed to change its stance on its aggressive policy.
The report comes one day after career services firm Challenger, Gray & Christmas reported private employers in October announced the most job cuts in a single month since February 2021, with the firm’s Andrew Challenger warning “more cuts will be on the way as we enter 2023” given growing uncertainty over the economy and the Fed’s rate hikes.
After losing more than 20 million jobs at the height of pandemic uncertainty in the spring of 2020, the labor market forcefully led the economic recovery and has remained strong despite some sectors taking a hit as the Fed raises interest rates. In a statement earlier in the week, ADP chief economist Nela Richardson said that although the labor market remains “really strong,” hiring has not been broad-based, with manufacturing firms, which are heavily sensitive to interest rates, losing 20,000 jobs last month, for example. Nevertheless, Fed officials have continued to point to the labor market’s strength as evidence the economy can withstand additional rate hikes.
What To Watch For
The Fed has just one more policy meeting this year, concluding on December 5. In the meantime, officials will be eyeing the upcoming consumer price index report for October, which is slated for release on Thursday.