U.S. employers continued to hire vigorously in October, adding 261,000 jobs, a sign that as Election Day approaches, the economy remains a picture of solid job growth and painful inflation.
Friday’s government report showed hiring was brisk across all industries last month, although the overall gain was down from 315,000 in September. The unemployment rate fell from a five-decade low of 3.5% to a still healthy rate of 3.7%.
A strong labor market compounds the challenges the Federal Reserve faces as it raises interest rates at the fastest pace since the 1980s to try to bring inflation down from a nearly 40-year high. Steady hiring, solid wage growth and low unemployment have benefited workers. But they also contributed to the price increase.
“Employers continue to worry that hiring tomorrow will be harder than today, which actually suggests they don’t see a recession on the horizon,” said Betsey Stevenson, economist at the University of Michigan, who was a major in economics. adviser to President Barack Obama.
Stevenson noted that more than half of last month’s net hires were in sectors — health care, education, restaurants and hotels, for example — that still appear to be catching up with the steep job losses they suffered during the pandemic recession. . Hiring in these sectors will likely continue, she suggested, even if the economy slows.
October jobs figures were the last major economic report before polling day, with voters very focused on the state of the economy. Chronic inflation is hammering the budgets of many households and has risen to the forefront of voters’ concerns during the midterm legislative elections. Republican candidates have attacked Democrats over inflation in their drive to regain control of Congress.
The latest data suggests that the labor market may be cooling, if only gradually, as the Fed hopes to see. Over the past three months, hiring gains have averaged 289,000, down from the blistering monthly rate of 539,000 a year ago. Average hourly earnings, on average, rose 4.7% from a year ago, a year-over-year gain smaller than September and down from a 16-year high years by 5.6% in March.
The rise in the unemployment rate occurred because about 300,000 Americans said they were no longer employed. The unemployment rate is calculated from a separate survey of the employment figure and can sometimes move in a different direction in the short term.
Nonetheless, last month’s wage hike will likely continue to fuel inflationary pressures.
“This report was definitely strong enough to keep the Fed on track to raise rates,” said UBS economist Jonathan Pingle.
President Joe Biden and congressional Democrats have pointed to the vigorous resurgence in hiring as evidence that their policies have helped get Americans back to work faster than the nation has managed to after previous downturns. But that message was overtaken in midterm political campaigns by the crushing surge in inflation, which embittered many Americans about the economy under Democratic leadership in Congress and the White House.
The October jobs report showed job gains were broad-based. Health care added 53,000 people, with hospitals and doctors’ offices continuing to recruit after losing many workers at the height of the pandemic. Manufacturing added 32,000. A category that includes engineers, accountants and lawyers added 39,000.
Yet parts of the economy have begun to reel under the weight of rising prices and much higher borrowing costs brought about by the Fed’s aggressive rate hikes. Especially in sectors like housing and technology, hiring has declined. Many tech companies, such as ride-sharing company Lyft and payment company Stripe, have announced plans to lay off workers. Amazon says it will suspend corporate hiring.
More broadly across the economy, however, the pace of layoffs remains unusually low. And the companies of travel, restaurants, manufacturing and healthcare are still hiring steadily. Southwest Airlines told investors last week it was on track to hire 10,000 employees this year, including 1,200 pilots. Laboratory Corporation of America said it expects significant hiring.
Jerry Flanagan, CEO of JDog Brands, says his company’s sales continue to grow and its franchisees are still hiring even after the company raised prices to cover higher fuel costs. The company mainly employs veterans for waste hauling and carpet and floor cleaning and has approximately 300 outlets nationwide.
“They need workers,” Flanagan said of the company’s branches. “They need people to transport the junk. They need drivers, they need carpet cleaning technicians.
Flanagan said his company would try to avoid layoffs even if the economy slows. If sales decline, workers may switch to distributing door hanger advertisements, lawn signs and other forms of marketing.
“They’re going to keep these people as long as they can,” Flanagan said. “There’s so much work out there.”
Some employers are finally finding all the staff they need.
This week, Rainbow Blossom Health Food Markets in Louisville, Ky., finally filled all of the jobs it had advertised after more than a year of struggling with a staff shortage.
“It’s a great feeling,” said Summer Auerbach, co-owner of the five-store family chain.
Auerbach said the economic environment appears to be reverting to the pre-pandemic economy. For the first time in months, for example, applicants are following up via email to verify their applications.
To Wednesday press conference, Fed Chairman Jerome Powell noted that the strength of the labor market is fueling inflationary pressures as companies continue to raise wages. In September, average salaries rose more than 6% from 12 months earlier, according to the Federal Reserve Bank of Atlanta. Wage increases can fuel inflation if companies pass on at least some of their higher labor costs to their customers in the form of higher prices.
Powell spoke after the Fed announced a fourth straight three-quarter point hike in its benchmark rate. This is the latest in a series of unusually large increases that have heightened the risk of a recession.
Housing absorbed the worst damage from rising borrowing costs. Fed rate hikes sent average long-term mortgage rates jumping to about 7%. Home sales have collapsed and home prices, once soaring, have begun to slow.
For now, the economy is still growing. It rose at an annual rate of 2.6% in the July-September quarter after contracting in the first six months of the year. With inflation still painfully high and the Fed making borrowing increasingly expensive for consumers and businesses, most economists are expecting a recession early next year.
— The Associated Press