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Job growth smashed expectations in October. Payroll employment rose by 165,000, while the prior two months of growth were upwardly revised by a combined 84,000 jobs. This brings the 3-month moving average to a perfectly healthy 137,000.
The unemployment rate fell from 4.2% to 4.1%, and it fell for the right reasons: the labor force grew and the number of unemployed people decreased. The prime-age (25–54) employment rate—a key measure of labor market health—stayed unchanged at a solid 80.7% for the month.
Professional and business services led the way this month, with an unexpected surge driven by an increase in consultants (+17,300), administrative and support service workers (+24,400), and staffing firms (+18,600).
Over the past year, job growth has been dominated by healthcare. Don’t expect that to change anytime soon.
Financial activities has lost nearly 100,000 jobs over the past year, and given reports of hedge fund struggles, those losses will probably deepen in the November jobs report.
If there’s bad news in this report, it’s this: it remains a great time to have a job but a bad time to need one. Layoff activity is historically subdued, but job seekers are struggling to find employment: the average duration of unemployment rose to 27.1 weeks, the longest since December 2021.
Big Picture
We weren’t worried about the labor market prior to this report, and we’re even less worried about it now. Growth is fine. It’s inflation that’s concerning.
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Long searches are now common. More than a quarter of the unemployed (2.0 million of 7.1 million) have been looking for 27 weeks or more.