US employment rose sharply in October: 165,000 new jobs driven by the services and technology sectors
Solid figures, well above expectations: unemployment has fallen to 4.1 per cent. A rate rise by the Fed in December now seems more likely
Employment growth in the United States picked up pace in October: 165,000 jobs were created, whilst the unemployment rate fell to 4.1 per cent. The strengthening of the labour market – following the setback in mid-summer – increases the likelihood that the Federal Reserve will raise interest rates in December.
Data better than expected
The Labour Department’s report – which has been closely scrutinised even after the mid-term elections – also shows that, between August and September, the economy created 84,000 more jobs than previously reported. The fall in the unemployment rate, from 4.2 per cent in September to 4.1 per cent, occurred despite 421,000 people joining the labour force.
The figures released have exceeded expectations and come on top of this week’s report on the rise in job vacancies in September. This trend, combined with historically low levels of redundancies, is raising concerns about a possible overheating of the labour market. However, economists and Fed experts have so far maintained that the labour market poses no inflationary risks. “The economy is at full employment, or very close to that level,” said Carl Weinberg, chief economist at High Frequency Economics. “We expect,” he added, “that the Fed will shift its focus to the risk that labour demand may outstrip supply, given the current pace of growth in demand.”
Employment in the non-agricultural sector therefore rose by 165,000 in October: well above the forecasts of economists surveyed by Reuters and Bloomberg, who had predicted an increase of 65,000.
Key sectors
Last month’s job growth was driven by the professional and business services sector, which added 70,000 jobs: a figure well above the monthly average of 15,000 recorded over the last 12 months. In the healthcare sector, employment rose by 42,000, whilst the transport and storage sector added 25,000 jobs. The manufacturing sector saw an increase of 19,000 jobs, spread across the computer and electronic products, machinery and primary metals sectors. These increases are likely linked to developments in artificial intelligence. More modest growth was seen in the retail trade, financial services and public administration sectors.
