The U.S. economy added 261,000 jobs in October, stronger than expected, while the unemployment rate increased slightly to 3.7%, up from 3.6% the previous month, according to the U.S. Bureau of Labor Statistics.
Notable job gains occurred in health care, professional and technical services, and manufacturing.
The number of unemployed persons increased 306,000 to 6.1 million.
The unemployment rate has been in a narrow range of 3.5% to 3.7% since March.
The number of long-term unemployed – those jobless for 27 weeks or more – was little changed at 1.2 million. The long-term unemployed accounted for 19.5% of all unemployed persons.
The labor force participation rate held steady at 62.2% and has shown little net change since early this year.
Wages continued to increase, albeit at a slower pace than earlier this year, with the average hourly rate rising to $32.58.
Over the past 12 months, average hourly earnings have increased by 4.7%.
The housing construction sector continued to add jobs.
“Residential building construction employment increased by a modest 0.3% month over month, while non-residential picked up by 0.4 percent,” says Odesa Kushi, deputy chief economist for First American, in a statement. “Residential building is up 7.7 percent compared with pre-pandemic levels, while non-residential building remains 4.8 percent below pre-pandemic levels.
“However, the gains were not broadly based,” Kushi says. “Specialty trade contractor jobs declined for both residential and non-residential. This sub-sector comprises establishments whose primary activity is performing specific activities, such as pouring concrete, site preparation, plumbing, painting and electrical work.”
The strength of the October jobs report means it is likely the Federal Reserve will continue to raise the base rate at its current rapid pace.
“The Federal Reserve fears inflation becoming entrenched via a wage-price spiral, so the Fed is closely watching the unemployment rate and job gains, but also average hourly earnings and the labor force participation rate,” Kushi says. “These metrics are key to understanding whether the supply and demand dynamic for workers is coming into balance.”
“Today’s report indicates the labor market is slowing a bit, but still not within the Fed’s speed limit,” Kushi adds. “Wages grew by 0.4 percent month over month, which was stronger than expected. On an annual basis, wage growth is up 4.7 percent, slower than in September, but still too fast for the Fed.”
Photo: Saulo Mohana