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US adds 261,000 jobs, showing continued signs of robust labor market

US job growth rose unexpectedly sharply in October, defying expectations of a larger slowdown as the historically tight labor market rebounded. proactive efforts curb demand.

The economy added 261,000 positions last month, exceeding the consensus forecast of 200,000, according to data released by the Bureau of Labor Statistics on Friday. This figure is down from his revised upwards of 315,000 in September and 292,000 in August. The economy has added 407,000 monthly jobs on average this year, compared to a monthly increase of 562,000 in 2021.

Despite these improvements, the unemployment rate rose to 3.7%, just above its pre-pandemic low.

A red-hot labor market has long been a source of discomfort for the Federal Reserve as it seeks to curb economic growth to curb decades of high inflation. A severe labor shortage is helping to push up wages and fuel inflation as employers try to fill positions.

Federal Reserve Chairman Jay Powell said at a press conference after the central bank’s announcement on Wednesday that the labor market was “overheated.” decision Raise the Federal Funds Rate by 0.75 points for the fourth consecutive time.Citing recently released data showing both stable labor costs and job openings climb unexpectedlyhe warned, “We haven’t seen a real softening case yet.”

Job gains in October were driven by job gains across healthcare, professional and technical services, and manufacturing. The number of leisure and hospitality jobs also increased by 35,000. Construction and retail are among the sectors not reporting monthly position increases.

The percentage of Americans employed or looking for work (known as the labor force participation rate) did not improve in October, stabilizing at 62.2%. Accelerated from a climb. The annual pace is steady at 4.7%.

“The Fed still has an inflation problem because we’re still seeing very strong wage growth and stubbornly low supply,” said Sarah House, senior economist at Wells Fargo & Co. “I see no easy way out of this inflation, and that is an increase in the labor supply,” she said.

Powell warned on Wednesday that wages were “flat” at levels “well above” consistent with inflation returning to the Fed’s 2% target. The Fed chairman suggested this week that the Fed would consider slowing the pace of rate hikes, despite evidence that the economy has not cooled as quickly as expected. That potential change could come soon after or after the December meeting, given not only the magnitude of interest rate rises this year, but also the delayed impact of policy changes on the real economy.

A potential course correction by the US central bank comes after pushing the Federal Funds rate into the 3.75% to 4% range. This is the level that suppresses activity more strongly.

Powell clarified that a slowdown in the pace does not mean an easing fight against inflation, but warned that policy rates would reach higher than expected levels. , the Federal Funds rate is expected to peak above 5% next year.

Economists warn that a rise in so-called end-of-term interest rates will make the Fed even less likely to slip into recession and the unemployment rate will likely rise above 5%.

“They are the only priority right now, and that keeps inflation down,” said Bob Michele, head of fixed income, currencies and commodities at JPMorgan Asset Management. “I tried to tell the market that we weren’t going to turn around or pause,” Powell said on Wednesday. [because] They are still concerned about inflation.

U.S. government debt, which has slumped in value this year following the Federal Reserve’s (Fed) policy actions, initially came under selling pressure again on Friday, but reversed much of its move. Yields on 10-year government bonds, the benchmark used to set borrowing costs for consumers, businesses and other governments, rose 0.03 points to 4.15%. When bond prices fall, yields rise.

The S&P 500 rose 1.3% right after the open.

Jefferies economist Thomas Simons said “employment growth has not slowed enough, and wages have not slowed enough, as the August and September data first suggested.” rice field. “This keeps rate hikes on the December table for another 75 basis points. [Fed] However, clearly there is much more data between now and then. ”

https://www.ft.com/content/1f3a7a41-daa8-49c5-ab51-3c0822421e40 US adds 261,000 jobs, showing continued signs of robust labor market

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