Unemployment up in the United States, but job creations keep pace

Unemployment on the rise in the United States, but the creations of’ jobs keep pace

MISE À DAY

The jobless rate edged up again in October in the United States, as the first signs of an effect of the Fed's monetary policy against inflation are desperately awaited, but job creations maintained their pace from the previous month, according to data released Friday by the Department of Labor. 

The jobless rate rose 0.2% month on month in October, to 3.7%, however remaining within the range observed since March, the ministry said.

Job creations, on the other hand, maintained an almost identical pace to September, with 261,000 jobs created last month, against 263,000 in September, the creations primarily concerning the health, technical services and industry.

In either case, the data exceeded the expectations of analysts, who anticipated unemployment at 3.6%, but only 220,000 job creations, according to the consensus published by Briefing.com.

“Job creations have progressed more than expected, the unemployment rate has increased, but remains close to its pre-pandemic levels, which remain the lowest in the last five years”, detailed Rubeela Farooqi, Chief Economist for the United States for the firm HFE, in a note.

However, certain signs seem to be pointing in the direction of a slowdown in the American job market since “the activity rate has fallen and the average hourly wage is down”, added Ms. Farooqi, who nevertheless underlined that “the market does not yet show any real adjustment in response to the rapid monetary tightening”.

Leeway for the Fed

The employment situation remains under scrutiny under the magnifying glass, because it is one of the expected signs of the effects of the fight against inflation. A relative deterioration of the labor market is thus, paradoxically, desired and expected.

For more than a year, the labor market has been very tight due to a labor shortage. Employers are struggling to recruit, and are raising wages to attract candidates and retain employees, which is helping to drive up prices.

On Wednesday, the Monetary Committee of the US central bank, the Fed, ( FOMC) had announced a 0.75 percentage point increase in its key rate, now in a range of 3.75 to 4.00%, its highest level since January 2008.

But the effects of this monetary tightening will take time, warned the chairman of the Federal Reserve, Jerome Powell, who also considered “very premature” any “pause” in the rise in rates, even if the FOMC was open “to moderate its increases as of the next meeting.”

But a persistently low unemployment rate is also seen by investors as a sign of an economy that remains robust and therefore allows more room for maneuver for the Fed before risk plunging the economy into a potential recession.