US employment growth was stronger than expected in October, despite Federal Reserve interest rate hikes aimed at slowing inflation and the labor market. Non-farm payrolls have grown by 261.000 units in the last month, while the unemployment rate rose to 3.7%, according to data released today by the US Department of Labor. The actual numbers beat the Dow Jones expectations they indicated 205.000 more jobs, but worse than the estimate of 3.5% for the unemployment rate.
Average hourly wages grew by 4.7% compared to a year ago and the 0.4% on a monthly basis, indicating that wage growth could still put pressure on inflation. Annual growth met analysts’ expectations while the monthly figure was slightly above the estimate 0.3%.
Here is the creation of jobs in the various sectors
Health care (healthcare) registered 53.000 new jobs, while the sectors of the technical services e manufacturing they contributed with 43.000 e 32,000 units respectively. The sector too hospitality o (hospitality) experienced solid growth in October, with an increase of 35.000 jobs, albeit at a significantly slower pace compared to the numbers recorded in 2021.
Entering the holiday season, the sector retail o retail sales recorded a modest increase of 7,200 units. While the Wholesale he added 15,000 new jobs. The transport and warehousing sectors contributed 8,000 units. The unemployment rate rose by 0.2%, while the participation rate in the labor force fell by one tenth of a point or (0.1%) to 62.2%.
Market Reaction: Equity purchases US dollar sales after nonfarm payrolls
Controversial reaction of both the dollar and the stock markets. Strong upside for the US indices on the back of nonfarm payrolls, the S&P 500 gains 1.35%, the Dow Jones marks a + 1.13% o (360 rebound points), while the Nasdaq Composite moves higher by 1.28% to 10.475.
We believe that the macroeconomic figures on the American world of work cannot change the perception of US central bankers on the health of the US labor market which continues to show signs of strength in terms of growth in new jobs. writes in a note Philip DiodovichSenior Market Analyst, IG
IThe market, on the other hand, reacts to the higher-than-expected rise in the unemployment rate to 3.7% and wage growth which appears to have stabilized after months of sharp rise. The probabilities of a possible slowdown in the magnitude of the next hike have thus increased rates by the Fed at the December meeting. At the moment the most probable scenario according to the markets is that of an increase of 50 bps (new range at 4.25% -4.50% at the end of the year). We believe that the real decision-maker will be the trend in consumer prices (core CPI and core PCE indices) and consumer inflation expectations. On the markets, in the meantime, we observe a sharp decline in the dollar. The Eurodollar rose to 0.9862 and the cable to 1.1276. Good recovery also in equities with strong growth indices. Filippo Diodovich concluded in a note.