11/4/2022: October Jobs Report Came In Hot
The October job report is out. 261,000 jobs were added in October, and the unemployment rate rose to 3.7% in October from 3.5% in September. August’s unemployment rate was 3.7% so the unemployment is basically back to the level back in August. The labor force participation rate of 62.2% was about unchanged in October and has shown little net change YTD. The labor participation rate is till 1.2 percentage points below February 2020 level.
In October, average hourly earnings have increased by 4.7% YoY and 0.4% MoM. The same numbers for September are 5% YoY and 0.3% MoM. We are not seeing much of a wage growth slowdown here. 4.7% is still a lot higher than the Fed’s target 2% inflation rate and MoM change is a bit worrisome.
It appears that the labor participation is not going back to the pre-covid levels and wage growth remains strong, which indicates that labor demand surpasses supply currently. The US is pretty much at full employment and businesses are looking for workers in areas like health care and hospitality. I hope something can be done to address the labor supply issues to bring down inflation. The Fed’s approach of killing the economy to address inflation doesn’t seem to be the right solution and if it does work, it might be overly destructive.