U.S. job growth increased more than expected in October, despite Federal Reserve interest rate increases aimed at slowing a strong labor market.
The Labor Department reported Friday nonfarm payrolls grew by 261,000 for the month while the unemployment rate moved higher to 3.7%. Payroll numbers topped the Dow Jones estimate of 205,000, but were worse than the estimate of 3.5% unemployment rate.
Results suggest some loosening in labor market conditions, which would allow the Fed to shift towards smaller interest rates increases starting in December.
The Fed on Wednesday delivered another 75 basis point interest rate hike, but also signaled it may be nearing an inflection point in what has become the fastest tightening of monetary policy in 40 years.
“We did see a substantial increase in jobs. But there’s been a slowdown in the rate of increase. You would expect that as we get closer to full employment,” said Elise Gould, senior economist at the Economic Policy Institute.
Employment growth has averaged 407,000 per month this year compared with 562,000 in 2021.
According to the closely watched Labor Department’s report, last month’s hiring was led by healthcare, which added 53,000 jobs. Professional and technical services payrolls rose by 43,000 jobs.
Leisure and hospitality employment remains 1.1 million jobs below its pre-pandemic level.