WASHINGTON – US job growth exceeded expectations in October, and the unemployment rate fell to 4.1%, signalling a resilient labour market and giving the Federal Reserve greater scope to tackle inflation fuelled by the Middle East conflict.
Payrolls jumped by 165,000 jobs in October after an upwardly revised 60,000 gain in September, the Labor Department’s Bureau of Labour Statistics said on Nov 6.
Economists polled by Reuters had forecast payrolls advancing 65,000 after a previously reported 29,000 increase in September.
Estimates ranged from 35,000 to 125,000 jobs.
Economists estimated the US economy needs to create at least 40,000 jobs per month to keep up with growth in the working-age population. The so-called break-even rate has declined from roughly 150,000 in 2024 because of the smaller labour force.
The unemployment rate declined from 4.2% in September.
Professional and business services led the gains, adding 70,000 jobs, far above the sector’s average monthly gain of 15,000 over the past year.
Health care added 42,000 jobs, above its average monthly gain of 31,000 over the last year.
The sector has propped up the labour market in the United States in the last year, as an ageing population requires more care both in hospitals and at home.
Transportation and warehousing added 25,000 jobs, mostly among couriers and messengers, while manufacturing added 19,000 jobs, the data showed.
Employment in other major sectors, including construction, retail, financial activities and government, was largely unchanged.
Average hourly earnings for all employees were up 3.1% over the past 12 months, with wages continuing to lag behind stubbornly high inflation, meaning most workers are seeing real wage losses.
Historically low layoffs and a recent jump in job openings have raised the prospect of labour market tightening.
But economists and US central bank officials have maintained that the labour market poses no inflation risk.
Some economists have argued that a shrinking supply of workers amid an immigration crackdown and retirements is the primary driver of the relatively low unemployment rate.
The Fed last week left its benchmark overnight interest rate in the 3.75% to 4% range. Economists expect a rate hike in December. The consumer inflation report for October due out on Nov 10 could offer more clues on the course of monetary policy in early 2027.
Despite the labour market resilience, job gains are lagging economic growth.
Gross domestic product increased at a 3.4% annualised rate in the third quarter, fuelled by strong consumer spending and businesses aggressively investing in artificial intelligence.
Economists said employers likely overhired after the Covid-19 pandemic, and some businesses were probably uncertain about their staffing needs as they incorporated AI into their operations.
They said uncertainty stemming from the US-Israel war with Iran, which has raised energy prices, is also making employers hesitant to increase headcount.
Limited opportunities have made it difficult for young adults, recent college graduates and some unemployed people to find work.
Disenchantment over the economy, as well as anger over the Middle East conflict, now in its ninth month, cost President Donald Trump’s Republican Party control of Congress, with Democrats performing strongly in this week’s midterm elections. REUTERS, AFP
