October jobs report stronger than expected, employers added 261,000 jobs

The US Labor Department reported job growth in October was better than expected on Friday, despite efforts by the Federal Reserve to slow the labor market through interest rate hikes.

Nonfarm payrolls grew by 261,000 during October, beating the Dow Jones estimate of 205,000 additional jobs. The unemployment rate increased to 3.7%, missing the estimated 3.5%. That growth is the slowest pace of job gains since December 2020. Treasury yields rose following the release.

Average hourly earnings rose 4.7% over last year and 0.4% for the month. Market pricing shifted toward a 0.5 percentage point rate hike from the Federal Reserve in December, a less aggressive pace than has been seen in recent months. Traders expect a similar increase in February.

“There has been some signs of cooling,” said Elise Gould, Senior Economist at the Economic Policy Institute. “We did see a substantial increase in jobs. But there’s been a slowdown in the rate of increase. You would expect that as we get closer to full employment.”

Healthcare led job gains with an additional 53,000 positions. Technical services added 43,000 jobs, and manufacturing grew by 32,000. Leisure and hospitality also saw significant improvements, up 35,000 but with growth at a much slower pace than last year. Retail and wholesale trade showed modest increases of 7,200 and 15,000, respectively. Transportation and warehousing grew by 8,000 jobs.

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