The U.S. labor market remains strong, but after the Federal Reserve hiked its key interest rate by 0.75% last week, it is showing signs of cooling.
Employers added a seasonally adjusted 261,000 jobs in October — a good number, but it was the fewest since December 2020, and the unemployment rate rose to 3.7%, according to a report from The Wall Street Journal.
Wage gains in October ticked up from the previous month, but on an annual basis, increases have eased, a possible sign of loosening in the labor market. WSJ said the report points to an economy that is gradually losing momentum following robust growth last year and in the first part of this year. During the past three months, employers added an average of 289,000 jobs per month, down from 539,000 during the same period a year ago.
U.S. stocks ticked higher Friday but finished the week with losses. The yield on the benchmark 10-year-U.S. Treasury note rose.
The labor market is being pulled by two competing forces, said Ian Shepherdson, chief economist at Pantheon Macroeconomics. Employers are still restoring jobs they had cut during the height of the pandemic; however, some are pulling back on hiring amid uncertainty about how much the economy is going to slow and whether it might slide into a recession.
“Late summer, early fall maybe, there’s been a meaningful step down in the pace of hiring,” Shepherdson said.
