The U.S. economy added 261,000 jobs in October, exceeding estimates and led by health care, professional and technical services, and manufacturing, even as the unemployment rate ticked higher to 3.7%, the Bureau of Labor Statistics (BLS) reported on Friday. The strong jobs report could signal to the Federal Reserve that the economy can withstand further interest rate hikes.
Monthly job growth has averaged 407,000 in 2022, compared with 562,000 a month in 2021. Payroll growth was also revised upward for September, as the economy added more jobs than initially reported. Nonfarm payrolls rose by 315,000 in September, up 52,000 from an initial estimate of 263,000.
- The U.S. economy added 261,000 jobs in October, exceeding projections for a gain of 200,000 and pointing to a tight labor market
- The unemployment rate ticked higher to 3.7% in October, up from a multi-decade low of 3.5% in September
- By sector, job gains were strongest in health care, professional and technical services, and manufacturing
- The labor force participation rate edged down to 62.2%, while the employment-to-population ratio held steady at 60%
- Earnings for private sector workers rose 0.4% in October, compared with a 0.3% gain in September, and were up 4.7% from a year earlier
- Another stronger-than-expected jobs report could prompt the Federal Reserve to continue with its aggressive interest rate hikes
Job Gains by Sector
Health care added 53,000 positions, mainly in ambulatory care, nursing and residential care facilities, and hospitals. Employment in professional and technical services rose by 43,000. The manufacturing sector added 32,000 jobs, mostly in durable goods industries, which gained 23,000 positions. The leisure and hospitality sector, which has had the largest gains of any sector year-to-date, added 35,000 positions, mainly in accommodation services. Other major industries and sectors, including mining, construction, retail trade, information, and government, were little changed from September.
Unemployment Rate Ticks Higher
The unemployment rate rose from a multi-decade low of 3.5% in September and matched the rate in August. The number of unemployed people rose by 306,000, to 6.1 million. The labor force participation rate edged down to 62.2%, from 62.3% in September. Meanwhile, the employment-to-population ratio was relatively unchanged at 60%.
Hourly Earnings Continue to Rise
Average hourly earnings for private sector workers rose to $32.58 in October, a 0.4% increase from the previous month and compared with a 0.3% gain in September. Year-over-year, nominal wage growth decelerated to 4.7% from 5% in September and far below the current CPI inflation rate of 8.2%.
Impact on Monetary Policy
Another stronger-than-expected nonfarm payrolls report could prompt the Federal Reserve to adopt a more aggressive monetary policy stance ahead of the next meeting of the Federal Open Market Committee (FOMC) in December. The U.S. labor market remains historically tight, with job growth continuing despite the Fed’s tightening.