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U.S. employers added 261 thousand jobs last month, but job growth has slowed


The U.S. job market cooled off last month but only a little bit. You might say it went from sizzling to simmering. A new report from the Labor Department shows employers added 261,000 jobs in the month of October. That is fewer jobs than the month before. Analysts say a slowdown in the labor market could help take some of the pressure off inflation. NPR's Scott Horsley joins us now. Hey, Scott.

SCOTT HORSLEY, BYLINE: Good afternoon.

SUMMERS: So, Scott, just tell us, what should we make of this employment report?

HORSLEY: You know, it shows the labor market is remarkably resilient despite high prices and rising interest rates. Employers have added more than 4 million jobs so far this year. A former Federal Reserve economist, Julia Coronado, says that's a really strong showing even if October's job gains were a downshift from the first half of the year.

JULIA CORONADO: Hiring remains broad-based and resilient, but it is cooling off. And the sectors that are most impacted by higher rates are slowing the most.

HORSLEY: The housing market, for example, is definitely feeling the weight of those higher mortgage rates. Construction companies added just 1,000 jobs last month, down from 22,000 the month before. Meanwhile, the unemployment rate inched up last month to 3.7%. That rate's calculated from a different survey, and it actually showed a loss of jobs.

SUMMERS: OK, so tell us, where are we seeing jobs added?

HORSLEY: A lot of the new jobs last month were on the service side of the economy. Health care, for example, added more than 52,000 jobs in October. It was also a surprisingly strong month for manufacturing. Factories added 32,000 jobs last month, even though we've seen signs of a slowdown in factory orders. We're not seeing a lot of layoffs around the economy, despite warnings at some high-profile tech companies like Facebook's parent and Lyft. You know, for two years, employers have struggled with turnover and job vacancies. So Coronado, who now heads the National Association for Business Economics, says that's made employers reluctant to lay people off even when business is slow.

CORONADO: They are trying to hold on to their employees. We hear that from companies across sectors, that they plan to be less trigger happy. And that can give us greater resilience in the economy.

HORSLEY: Now, while they're not cutting workers, employers who do see a drop in demand may be slower to fill job vacancies or to replace workers when they quit.

SUMMERS: Now, the Federal Reserve has been concerned about overheating in the labor market and what that could possibly mean for inflation. Does today's report offer any reassurance on that score?

HORSLEY: A little bit, although this job market is still hotter than the central bank would probably like. Earlier this week, Fed Chairman Jerome Powell described the market as out of balance. What he means by that is employers want to hire more workers than they've been able to, so they're having to bid up wages as a result. And the Fed is worried that if wages rise too quickly, that could feed into inflation. In October, average wages were up 4.7% from a year ago. That's a smaller increase than the month before. So the trend is moving in the right direction as far as the Fed's concerned, even if wages are still climbing a little too fast for comfort.

SUMMERS: So what does that mean for the Fed's campaign against inflation?

HORSLEY: We'll have to wait and see. The Fed's been aggressively raising interest rates to try to cool off demand and bring prices under control. We've had four supersized rate hikes in a row, with the last one just this week. Coronado thinks today's report of a slowdown in job growth may leave the door open for the Fed to go with a smaller rate hike at its next meeting. If so, that could reduce the risk that the Fed overdoes it and tip the economy into recession.

CORONADO: We still have a shot at either a soft landing or a not too terrible downturn.

HORSLEY: But we'll get a lot more economic data before that next Fed meeting in December.

SUMMERS: NPR's Scott Horsley, thanks as always.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.