Unemployment Ticks Higher in Final Jobs Report Before Election

U.S. President Joe Biden delivers remarks about the student loan forgiveness program from an auditorium on the White House campus in Washington, U.S., October 17, 2022. REUTERS/Leah Millis
November 4, 2022

By Lucia Mutikani

WASHINGTON (Reuters)—U.S. employers hired more workers than expected in October, but a rise in the unemployment rate to 3.7% suggested some loosening in labor market conditions, which would allow the Federal Reserve to shift towards smaller interest rates increases starting in December.

Nonfarm payrolls increased 261,000 last month, the Labor Department's closely watched employment report showed on Friday. Data for September was revised higher to show 315,000 jobs added instead of 263,000 as previously reported.

Economists polled by Reuters had forecast 200,000 jobs, with estimates ranging from 120,000 to 300,000.

The unemployment rate increased to 3.7% from September's 3.5%. Average hourly earnings increased 0.4% after rising 0.3% in September. They were likely boosted by a calendar quirk.

Wages increased 4.7% year-on-year in October after advancing 5.0% in September as last year's large increases dropped out of the calculation. Other wage measures have also come off the boil, which bodes well for inflation.

The Fed on Wednesday delivered another 75 basis points interest rate hike and said its fight against inflation would require borrowing costs to rise further, but signaled it may be nearing an inflection point in what has become the fastest tightening of monetary policy in 40 years.

Job growth has remained solid even as domestic demand has softened amid higher borrowing costs because of companies replacing workers who would have left. But with recession risks mounting, this practise could end soon. A survey from the Institute for Supply Management on Thursday found some services industry companies "are holding off on backfilling open positions," because of uncertain economic conditions.

Still, the labor market remains tight, with 1.9 job openings per unemployed person at the end of September.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)