Unemployment rises in final jobs report ahead of election


By Lucia Mutikani

WASHINGTON (Reuters) – U.S. employers hired more workers than expected in October, but a rise in the unemployment rate to 3.7% suggested an easing in labor market conditions, which would allow the Federal Reserve to pass to lower interest rate increases from December.

Nonfarm payrolls rose by 261,000 last month, the Labor Department’s closely watched jobs report showed on Friday. September’s data has been revised up to show 315,000 jobs added instead of 263,000 as previously reported.

Economists polled by Reuters had forecast 200,000 jobs, with estimates ranging from 120,000 to 300,000.

The unemployment rate fell from 3.5% to 3.7% in September. Average hourly earnings rose 0.4% after rising 0.3% in September. They were probably spurred on by some odd timing.

Wages rose 4.7% year-on-year in October after rising 5.0% in September, as strong increases from last year were excluded from the calculation. Other wage measures also came out of the boil, which bodes well for inflation.

The Fed hiked interest rates another 75 basis points on Wednesday and said its fight against inflation would require another hike in borrowing costs, but signaled it could come close to a turning point in what has become the fastest monetary policy tightening in 40 years.

Job growth remained solid even as domestic demand weakened amid higher borrowing costs as companies replaced workers who would have left. But with rising recession risks, this practice may soon come to an end. A survey by the Institute for Supply Management on Thursday found that some service-sector companies are “holding back from filling vacancies” due to uncertain economic conditions.

However, the labor market remains tight, with 1.9 job offers per unemployed person at the end of September.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)


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