over 1 year ago • 2 mins
Data out on Friday showed the US added more jobs than expected last month, but there are always two sides to every story.
What does this mean?
The Federal Reserve (the Fed) hiked interest rates by 0.75 percentage points for the fourth-straight time last week, describing the jobs market as “overheated” at the time. And Friday’s jobs report didn’t prove it wrong: the US added 261,000 jobs last month, trumping the 193,000 economists expected. And because the competition for jobs has been fierce, companies bumped their average hourly earnings up a higher-than-expected 0.4% from September to attract workers. That’ll fire up blazing inflation, not least because those businesses will likely hike their prices to make up the difference. But there was a whisper of hope: that gain was the slowest uptick since December 2020, and the unemployment rate ticked up to 3.7% after hitting a 50-year low in September.
Why should I care?
For markets: Gird your loins.
There are cracks showing up all over the job market, with even industry titans like Amazon and Apple announcing that they’re halting hiring for corporate roles. Others are taking an outright ax to the problem: Lyft and Stripe are gearing up to cut 13% and 14% of their workforces respectively – and that’s only the start. Now, the Fed has said it’s hoping for a drop in job openings rather than job losses, but the central bank – currently on its most aggressive rate-hiking campaign since the 1980s – will take whatever it can get.
The bigger picture: Lucky for some.
The Fed will be cursing the resilient jobs market for making it nearly impossible to calm swelling wages and inflation, but the US government has a different view. See, it’s repeatedly touted the strong jobs market as an indicator of a robust economy, so Friday’s data – the last major economic report to drop before key midterm elections this week – will only put more wind in its campaigning sails.
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