The Employment Situation in October
Today’s jobs report shows the economy added 261,000 jobs in October, for an average monthly gain of 289,000 over the past three months. The number of jobs added in October came in above market expectations. Employment in August and September was revised up by a combined 29,000 jobs.
The unemployment rate rose to 3.7 percent. Labor force participation ticked down to 62.2 percent. Nominal wages rose by 0.4 percent in October and have risen by 4.7 percent over the last year.
1. Average monthly job growth over the last three months was 289,000, above expectations but a substantial slowdown from average job growth last winter.
Job growth in August, September, and October averaged 289,000 jobs per month (Figure 1). Since monthly numbers can be volatile and subject to revision, the Council of Economic Advisers prefers to focus on the three-month average rather than the data in a single month, as described in a prior CEA blog.
2. Monthly wage growth ticked up in October, but changes over longer periods of time suggest that the pace of wage growth may be moderating.
Nominal average hourly earnings ticked up to 0.4 percent over the month, a still-elevated pace relative to pre-pandemic. Wage growth is lower than at the end of 2021, and the three-month change is starting to show signs of moderating (Figure 2). Year-over-year, nominal wage growth also slowed, to 4.7 percent. While we do not have the inflation report for October yet, real wage growth month-over-month and year-over-year were likely negative.
3. Labor force participation rates for workers ages 16 and over and prime-age (25 to 54) workers ticked down.
Labor force participation for workers ages 16 and over ticked down to 62.2 percent. Participation for prime-age (25 to 54) workers also ticked down, although both measures have seen substantial recovery from their pandemic lows. Overall, the growth in labor force participation has been relatively robust in this recovery compared to past recoveries.
So far this year, overall labor force participation has been largely flat. However, labor force participation for prime-age workers, despite the tick down in October, has increased in 2022. Growth in overall labor force participation faces headwinds from the aging of the population, which is why many economists prefer to focus on the prime-age participation rate.
4. The unemployment rate rose to 3.7 percent, a still low rate. The broadest measure of underemployment ticked up, but remains near record lows.
The unemployment rate rose to 3.7 percent, but has remained around the same low rate since March 2022. The broadest measure of underemployment, which includes workers who are out of the labor force but would take a job if offered and workers who are working part-time but would prefer full-time work, ticked up just above its series low. It has remained around the same low rate since June 2022.
As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and payroll employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report, and it is informative to consider each report in the context of other data as they become available.
