US Added 261k Jobs in October with Jobless Rate Rising to 3.7%

US Nonfarm Payrolls in October rose 261,000 rose higher than the expected 200,000 after the prior increase of 315,000. Job gains were led by education and health, which added 79,000 jobs. Private payroll company ADP reported that US jobs grew 239,000 private payrolls in October (consensus 195,000). The Unemployment Rate in October was 3.7% (consensus 3.6%) versus the prior 3.7% reading as the labor force participation rate fell to 62.2% from 62.3%.

Real wages continue to fall as workers struggle to keep up with the cost-of-living Average Hourly Earnings rose 0.4% (consensus 0.3%) after September’s 0.3% increase. The Average Workweek was 34.5 (consensus 34.5) after the prior 34.5.

Working

October 2022 US Employment Report

The jobless rate fell to 3.5% in October the Labor Department reported Friday. The unemployment rate fell back to the February 2020 pre-pandemic rate of 3.5%, which was a 50-year low.

US Jobs Report

October 2022 US Employment Report and Expectations

Highlights

Employment

  • Changes In Nonfarm Payrolls Oct: 261K (est 193K; prev 263K)
  • Unemployment Rate Oct: 3.7% (est 3.6%; prev 3.5%)
  • Labour Force Participation Rate Oct: 62.2% (est 62.3%; prev 62.3%)
  • Prior two-month net revision 29,000 higher than previously reported. The change in total nonfarm payroll employment for August was revised down by 23,000, from +315,000 to +292,000, and the change for September was revised up by 52,000, from +263,000 to +315,000
United States Unemployment Rate

The unemployment rate and number of unemployed persons prior to the coronavirus (COVID-19) pandemic was 3.5 percent and 5.7 million, respectively, in February 2020). That leaves the economy down by 1.2 million jobs, or 0.8 percent, from its pre-pandemic level in February 2020.

United States Non Farm Payrolls
United States Non-Farm Payrolls
  • Change in Manufacturing Payrolls Oct: 32K (est 12K; prevR 23K)
  • Change in Private Payrolls Oct: 233K (est 200K; prevR 319K)
  • US Change in Government Payrolls Oct +28K (prev -25K)
  • Household survey -306K vs +204K prior
  • U6 underemployment rate Oct: 6.8% (prev 6.7%)
  • Long-term unemployed at 1.1m vs (prev 1.1m, 1.2m pre-pandemic)
  • The long-term unemployed accounted for 19.5 percent of all unemployed persons.
  • The employment-population ratio 60.0% vs (prev 60.1%, 61.2% before pandemic)

Earnings

  • US Average Hourly Earnings (M/M) Oct: 0.4% (est 0.3%; prev 0.3%)
  • US Average Hourly Earnings (Y/Y) Oct: 4.7% (est 4.7%; prev 5.0%)
  • US Average Weekly Hours All Employees Oct: 34.5 (est 34.5; prev 34.5%)

The market had expected the October report released Friday to show nonfarm payrolls rose 200k new jobs.  October marks a drop from an average of 439K in the first eight months of the year, as higher interest rates and prices started to weigh on the economy. Private payroll company ADP reported that US jobs grew 239,000 private payrolls in October (consensus 195,000).

A severe labor shortage has driven up annual wage increases above 5% every month of this year. By contrast, wage gains averaged 3.2% in the 12 months to February 2020. Wage growth rose last month. Average hourly earnings rose by 0.4% in October from a month earlier. They were up 4.7% from a year earlier.

Employers hired across industries. Companies in certain industries that are vulnerable to interest-rate increases, such as technology and real estate, have announced layoffs. Some firms have implemented hiring freezes.

The labor force participation rate, which measures the share of the population working or looking for work fell to 62.2% in October from 62.3% in September. More workers joining the labor force could help sustain job growth in the coming months. Participation is down from 63.4% in February 2020.

Total nonfarm employment has increased by 22.0 million since hitting a trough in April 2020 and has returned to the pre-pandemic level. Private-sector employment is 629K higher than in February 2020, although several sectors have yet to recover. On the other hand, government employment is still 597K lower than its pre-pandemic level.

Market Reaction

U.S. Interest Rate Futures Priced in a 92% Chance of a 75-bps Fed Rate Hike in Nov, Up From 85.5% Before Sept Jobs Report. That would bring the Fed target rate to 4.5%.

The Nasdaq fell 2.8% in a broadening) equity rout after non-farm payrolls highlighting the sensitive to economic data. The jobs report wasn’t much more than a touch strong, and stocks were wrecked on fear of more Fed hikes. Weekly from 5% to just 1.7%.

Analysts October estimates for Jobs report were:

BMO

  • Notes that seasonally the headline payrolls print has a tendency to outpace forecasts in October coming in above estimates 52% of the time and missing 48% of the time by 71k and 39k, on average.
  • Just 16% of previous unemployment rate readings in October have been higher than expected, 48% have been better-than-estimates and 36% have matched forecasts.

Where the Jobs Were:

Job gains were widespread. In September, 5.2 percent of employed persons teleworked because of the coronavirus pandemic, down from 6.5 percent in the prior month. In May 2020, the first month these data were collected, 35.4 percent of employed persons teleworked because of the coronavirus pandemic. These data refer to employed persons who teleworked or worked at home for pay at some point in the 4 weeks preceding the survey specifically because of the pandemic.

Largest gains occurring (prior month) in:

  • Education/health +79k (+91k)
  • Business services +39k (+52k)
  • Leisure/hospitality +35k (+107k)
  • Manufacturing +32k (+23k)
  • Trade/transport +31k (-7k)
  • Government +28k (-4k)
  • Retail trade +7k (-8k)
  • Financial +3k (+1k)
  • Construction +1k (+22k)
Labor force participation rate (blue) down to 62.2% vs. 62.3% prior; female participation (purple) moved down to 56.7%; male participation (orange) unchanged at 68.1% @LizAnnSonders

Private Jobs

United States Nonfarm Payrolls - Private

Government Jobs

 

United States Government Payrolls

Manufacturing Jobs

United States Manufacturing Payrolls

Employment in manufacturing increased by 32 thousand in October of 2022. It follows an upwardly revised 23 thousand rise in September, beating market forecasts of a 15 thousand gain. 

 

 Wages Monthly

United States Average Hourly Earnings MoM

Wages Yearly

United States Average Hourly Earnings YoY

 Hours

United States Average Weekly Hours

Other October Employment Reports

  • ADP employment 239K vs 195K expected
  • ISM manufacturing employment 50.0 vs 48.7 prior
  • ISM services employment 49.1 vs 53.0 prior
  • Challenger Job Cuts of 33,843 vs 29,989 prior
  • Empire Fed employment 7.7 vs 9.7 prior
  • Initial jobless claims survey week 214K vs 233K a month ago
  • September JOLTS 10.717m vs 10.053m expected

Household Survey Data  

The unemployment rate increased by 0.2 percentage point to 3.7 percent in October, and the number of unemployed persons rose by 306,000 to 6.1 million. The unemployment rate has been in a narrow range of 3.5 percent to 3.7 percent since March.

Among the major worker groups, the unemployment rates for adult women (3.4 percent) and Whites (3.2 percent) rose in October. The jobless rates for adult men (3.3 percent), teenagers (11.0 percent), Blacks (5.9 percent), Asians (2.9 percent), and Hispanics (4.2 percent) showed little or no change over the month.

Among the unemployed, the number of permanent job losers changed little at 1.2 million in October, and the number of persons on temporary layoff also changed little at 847,000. The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.2 million in October. The long-term unemployed accounted for 19.5 percent of all unemployed persons.

The labor force participation rate, at 62.2 percent, and the employment-population ratio, at 60.0 percent, were about unchanged in October and have shown little net change since early this year. These measures are 1.2 percentage points below their values in February 2020, prior to the coronavirus (COVID-19) pandemic.

The number of persons employed part time for economic reasons was little changed at 3.7 million in October. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.

The number of persons not in the labor force who currently want a job was little changed at 5.7 million in October and remains above its February 2020 level of 5.0 million. These individuals were not counted as unemployed because they were not actively looking for work during the 4 weeks preceding the survey or were unavailable to take a job.

Among those not in the labor force who wanted a job, the number of persons marginally attached to the labor force was little changed in October at 1.5 million. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, decreased by 114,000 to 371,000 in October.


Establishment Survey Data

Total nonfarm payroll employment increased by 261,000 in October. Monthly job growth has averaged 407,000 thus far in 2022, compared with 562,000 per month in 2021. In October, notable job gains occurred in health care, professional and technical services, and manufacturing.

In October, employment in health care rose by 53,000, with gains in ambulatory health care services (+31,000), nursing and residential care facilities (+11,000), and hospitals (+11,000). So far in 2022, health care employment has increased by an average of 47,000 per month, compared with 9,000 per month in 2021.

Professional and technical services added 43,000 jobs in October. Employment continued to trend up in management and technical consulting services (+7,000), architectural and engineering services (+7,000), and scientific research and development services (+5,000). Monthly job growth in professional and technical services has averaged 41,000 thus far in 2022, compared with 53,000 per month in 2021.

Manufacturing added 32,000 jobs in October, mostly in durable goods industries (+23,000). Manufacturing employment has increased by an average of 37,000 per month thus far this year, compared with 30,000 per month in 2021.

Employment in social assistance increased by 19,000 in October and is slightly below (-9,000) its prepandemic level in February 2020. Within social assistance, employment in individual and family services continued to trend up in October (+10,000).

Wholesale trade added 15,000 jobs in October. Employment in wholesale trade has increased by an average of 17,000 per month thus far in 2022, compared with 13,000 per month in 2021.Employment in leisure and hospitality continued to trend up in October (+35,000), with accommodation adding 20,000 jobs.

Employment in food services and drinking places changed little over the month (+6,000). Leisure and hospitality has added an average of 78,000 jobs per month thus far this year, less than half of the average gain of 196,000 jobs per month in 2021. Employment in leisure and hospitality is down by 1.1 million, or 6.5 percent, from its February 2020 level.

Employment in transportation and warehousing changed little in October (+8,000). Within the industry, job growth occurred in truck transportation (+13,000), couriers and messengers (+7,000), and air transportation (+4,000). These gains were partially offset by a job loss in warehousing and storage (-20,000). Monthly job growth in transportation and warehousing has averaged 25,000 thus far this year, compared with 36,000 per month in 2021.

In October, financial activities employment was little changed (+3,000). Within the industry, job gains in insurance carriers and related activities (+9,000) and in securities, commodity contracts, and investments (+5,000) were partially offset by a job loss in rental and leasing services (-8,000). Employment in financial activities has changed little over the past 6 months.

Employment changed little over the month in other major industries, including mining, construction, retail trade, information, other services, and government.

Earnings

In October, average hourly earnings for all employees on private nonfarm payrolls rose by 12 cents, or 0.4 percent, to $32.58. Over the past 12 months, average hourly earnings have increased by 4.7 percent. In October, average hourly earnings of private-sector production and nonsupervisory employees rose by 9 cents, or 0.3 percent, to $27.86.

In October, the average workweek for all employees on private nonfarm payrolls was 34.5 hours for the fifth month in a row. In manufacturing, the average workweek for all employees was little changed at 40.4 hours, and overtime decreased by 0.1 hour to 3.1 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls held at 34.0 hours.

The change in total nonfarm payroll employment for August was revised down by 23,000, from +315,000 to +292,000, and the change for September was revised up by 52,000, from +263,000 to +315,000. With these revisions, employment gains in August and September combined were 29,000 higher than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.


The Employment Situation for November is scheduled to be released on Friday, December 2, 2022, at 8:30 a.m. (ET)


Source: AFP, Challenger, DOL, TradersCommunity Data, BLS

From The TradersCommunity News Desk