The Jobs Report – October 2022

Highlight

Another solid jobs report for October. The economy added 261K jobs above expectations of 193K, and last month’s gains were revised upward to 315K. The last two months were revised up by 29K.

What you need to know:

• Wage growth decelerated from 5% year-over-year to 4.7%. Although the wage gains are lagging inflation, we feel the leveling of wage growth is good news for the Fed’s inflation fight as moderating wages should temper demand and may put to rest the fear of a wage spiral pushing up inflation.
• Job gains were broad based as all sectors added jobs in October. Private payrolls grew by 233K, a decrease from last month. This brings the 3-month average growth for private payrolls to 262K. The average has decreased from the summer and is down from last October’s 539K average.
• The household survey showed a loss of 328K jobs in October, raising the unemployment rate to 3.7% from 3.5% last month. The household survey is more volatile than the establishment survey and could easily swing to a gain next month, but this bears watching. 
• The October report has, as most employment reports have, food for both bulls and bears. Overall, it’s a good report showing that the economy continues to generate jobs. The pace of that growth is undeniably slowing which is what the Fed wants. With 375bps of rate hikes this year, we expect some economic moderation. The job for the Fed is to see how this aggressive tightening ripples through the economy to avoid too much tightening. We expect rate hikes will continue, albeit at a more moderate pace in 2023.