US Creates More Jobs Than Expected in October; but the unemployment rate rises slightly to 3.7%
The US labor sector showed mixed signs in October. On the one hand, the economy created 261,000 jobs, more than analysts anticipated, and on the other, the unemployment rate rose slightly to 3.7%.
This report is key because it gives signals about the US economy in general —especially whether or not it is heading towards an imminent recession— and about the future decisions of the Federal Reserve with its reference interest rate. The latter because the central bank is still immersed in a historic effort to control inflation and a moderate rise in unemployment could suggest some relief when decreeing new increases in its interest rate.
Among Hispanics, the unemployment rate did not experience great changes in October and stood at 4.2% in October.
The report indicates that there were significant increases in the creation of jobs especially in sectors of work in health, professional and technical services and the manufacturing industry.
In September, the US economy had created 263,000 jobs and the unemployment rate stood at 3.5%.
The jobs report comes amid mixed signals from the US economy. Experts are looking at signs that employers are cutting back on hiring, a prospect to be expected after the Federal Reserve took action throughout the year by raising interest rates to slow the economy.
Chronic inflation is hitting the budgets of many households and has become one of the top concerns of voters ahead of the midterm elections that end next Tuesday. Republican candidates across the country have attacked Democrats, blaming them for inflation in their bid to regain control of Congress, despite the fact that it is a global phenomenon.
Precisely, President Joe Biden reacted to the report by highlighting that the unemployment rate remains at “historically low 3.7%” numbers and that this is a sign “of a solid recovery of jobs (lost in the pandemic).” “One thing is clear: While comments from Republican leaders seem to indicate they are cheering for a recession, the US economy continues to grow and add jobs,” he noted.
The challenges of the US economy
For now, the economy continues to grow. It expanded at an annual rate of 2.6% in the July-September quarter after contracting in the first six months of the year. But much of the growth last quarter was due to an increase in US exports. By contrast, consumers, the main driver of the economy, only modestly increased their spending above the rate of inflation.
Yet all of these indicators underscore the challenges facing the Fed as it raises interest rates at the fastest pace since the early 1980s to try to bring down inflation, to a four-decade high.
A low unemployment rate and strong wage gains are good for workers, but sizable wage increases can contribute to higher inflation.
At a news conference on Wednesday, Fed Chairman Jerome Powell noted that the strong labor market is fueling inflationary pressures as companies seek to attract and keep workers by raising wages.
In September, average wages increased more than 6% from the previous 12 months, according to the Federal Reserve Bank of Atlanta. That was the fastest such pace in 40 years, though it was still below inflation.
So far this year, the Fed has raised its key benchmark rate from near zero in early March to a range of 3.75% to 4%, the highest level in 14 years.
