The Bureau of Labor Statistics released the Employment Situation for October 2022. The report provides evidence that while the labor market remains strong, it is growing at a less rapid pace. Specifically, the report finds that the economy added 261,000 new jobs in October, and the unemployment rate increased slightly to 3.7 percent.
While job growth remains strong and unemployment is still at a low level, the report has a number of details that indicate the labor market is growing at a slower pace than earlier in the year. Some of this evidence is as follows:
- Labor force participation declined slightly in October. Given the tight labor market, the hope was that more workers would continue to enter the labor force. However, the increase in unemployment in October was not due to new workers entering the workforce, but rather due to a reduction in the number of employed workers in the household survey.
- Revisions to the change in employment over the past two months were mixed. The jobs number for September was revised down by 23,000 to 292,000, and the jobs number for August was revised up by 52,000 to 315,000. Together, the economy has averaged 289,000 new jobs over the past three months. While that number is consistent with a growing labor market, it is much lower than the pace of job growth in 2021 and earlier this year.
- Hourly earnings grew by 0.4 percent in October, with an annual increase of 4.7 percent. While wage growth remains high, it remains persistently below the rate of inflation, meaning that workers’ real wages are falling.
A slowdown in the labor market is anticipated as the Federal Reserve is rapidly increasing interest rates to reduce inflation. The concern is that too much tightening by the Fed will push the economy into a recession, but so far, the labor market remains strong.
