US hiring cools as unemployment ticks up

Slight slowdown in labour market bolsters case for Fed to stop raising interest rates

WASHINGTON – US job growth moderated in October by more than expected and the unemployment rate rose to an almost two-year high, marking a step down from the heated hiring pace this summer.

Nonfarm payrolls increased 150,000 last month compared with 297,000 in September, the Bureau of Labor Statistics reported on Friday. The unemployment rate climbed to 3.9% from 3.8%, and monthly wage growth slowed.

Stock futures and Treasuries rallied and the dollar weakened after the report.

Hiring in healthcare and social assistance drove the payrolls gain but other categories showed tepid growth or outright declines. Manufacturing payrolls fell by 35,000 in October, largely a reflection of the United Auto Workers’ strike. The hit will prove temporary though, given that union members have since struck tentative deals with the country’s largest automakers.

While the jobs market has been gradually normalising thanks to an improvement in labour supply over the past year and a tempering of demand for workers, the latest figures suggest some cracks are beginning to form.

Most notably, the rise in unemployment suggests a pickup in layoffs — a development employers had so far broadly avoided.

Looking ahead, sustained setbacks in the labour market — the bedrock of consumer spending and the broader US economy — risk raising concerns about the country’s ability to weather high interest rates without falling into recession.

The figures come on the heels of the Federal Reserve’s decision to hold off on raising interest rates for a second straight meeting. Fed chairman Jerome Powell hinted the central bank may be finished with rate hikes, a decision that would be reinforced in the months ahead by a further easing in labour demand.

Average hourly earnings rose 0.2% last month and were up 4.1% from a year earlier, the smallest annual advance since mid-2021. Earnings for nonsupervisory employees, who make up the majority of workers, increased 0.3% for a second month.