Slowing job numbers and a weakening labor market would relieve economic pressure, but recent data suggests prevailing strength despite stubborn inflation. According to the Monthly Employment Situation Summary, released this morning by the Bureau of Labor Statistics (BLS), the labor market added 261,000 jobs in October, down from the adjusted gain of 315,000 jobs in September, but still higher than expected. The ADP Employment Report released Wednesday also had a strong showing, with 239,000 private sector payrolls added last month. Under normal circumstances, strength in the labor market is good news; but combined with the rate of inflation and unemployment, the US economy appears to be overheating. “This is a really strong number given the maturity of the economic recovery…” said Nela Richardson, Chief Economist at ADP.
The Federal Reserve announced Wednesday that supply and demand imbalances are continuing. Unemployment is down and inflation is up. In response, the central bank raised interest rates by another ¾ of a percentage point for the fourth time this year and alluded to future hikes. Added jobs have been steadily decreasing since mid-summer, but unemployment has remained low, reported at 3.7% last month. Inflation has been trending down, as well, but at a much slower rate than expected by the Fed. Consumer spending remains low, as a result of long-term inflation and economic uncertainty, but that is likely to change with the holiday season approaching.
According to the Job Openings and Labor Turnover Summary, released Tuesday by the BLS, job openings increased to 10.7 million in September, while hires and separations both decreased. The openings were far from balanced across industries; accommodation and food services gained 215,000 openings, healthcare and social assistance added 115,000 openings, and wholesale trade lost 104,000 openings. Quits, or voluntary separations, remained at 2.7% from the past month, and layoffs and discharges edged down slightly. This suggests that companies are holding off on making the big staffing cuts that had been expected earlier in the year.
Health care added 53,000 jobs in October, within the sector, ambulatory health care services added 31,000 jobs, nursing and residential care facilities added 11,000 jobs, and hospitals added 11,000 jobs. Professional and technical services added 43,000 jobs, manufacturing added 32,000, and employment in social assistance added 19,000. Within the social assistance sector, individual and family services added 10,000 jobs in October, continuing an upward trend. Wholesale trade gained 15,000, and leisure and hospitality gained 35,000. Leisure and hospitality has reported an average increase of 78,000 jobs per month in 2022 but remains 1.1 million below pre-pandemic levels. Average hourly earnings rose by 12 cents for all employees on private, nonfarm payrolls.