LEILA FADEL, HOST:
The Labor Department issued its monthly jobs report this morning. It shows that hiring in October was stronger than expected, although slower than the month before. And a modest slowdown in hiring is not necessarily a bad thing. It might help to lower inflation. NPR's Scott Horsley joins us now to discuss.
SCOTT HORSLEY, BYLINE: Good morning, Leila.
FADEL: Good morning. So job growth has been really strong for most of the last two years. How do October's numbers compare?
HORSLEY: A little bit lower, but still very strong. Employers added 261,000 jobs last month. That's down from the 315,000 in September and down from an average of more than 400,000 jobs a month in the first half of the year. Now, some slowdown is to be expected at this point in the recovery. The economy's already replaced all the jobs that were lost during the pandemic. And Daniel Zhao, who's lead economist at the job search website Glassdoor, says slower job growth could actually make it easier for the Federal Reserve to achieve that soft landing it's hoping for. That is cooling off inflation without actually tipping the economy into recession.
DANIEL ZHAO: A gradually slowing job market means that a soft landing is still possible as long. As the unemployment rate remains low, a soft landing is not off the table.
HORSLEY: The unemployment rate in October ticked up a little bit to 3.7%. The unemployment rate's compiled from a separate survey, which actually showed a drop in jobs last month.
FADEL: So what's happening with wages?
HORSLEY: Wages have been going up, but not as fast as prices. In this competitive job market, employers are having to pay more to attract workers. And Federal Reserve Chairman Jerome Powell told reporters this week, when wages go up a lot, there is a danger of putting more upward pressure on inflation.
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JEROME POWELL: I don't think wages are the principal story of why prices are going up. I don't think that. I also don't think that we see a wage-price spiral. But, you know, once you see it, you're in trouble.
HORSLEY: Average wages in October were up 4.7% from a year ago, compared to a 5% annual increase in September. So pay raises have slowed down a little bit and that could give some comfort to the Fed.
FADEL: OK. So which industries are still adding jobs, and which ones are slowing down?
HORSLEY: A lot of the growth last month was on the service side of the economy. Health care added more than 50,000 jobs. Manufacturing had a good month, with more than 32,000 jobs added, even though there's been some slowdown in factory orders. It was a surprisingly weak month for bars and restaurants. They added only 6,000 jobs. And construction companies added only 1,000 jobs. Nela Richardson, who's chief economist at the payroll processing company ADP, says construction is one of those sectors that's particularly sensitive to the Fed's rising interest rates.
NELA RICHARDSON: We're seeing the signs of some of the Fed's rate hikes creeping in, perhaps in the goods-producing sector, and I think these would be early signs that that policy is having an impact.
HORSLEY: Companies that are seeing a drop in demand might be slow to fill job vacancies or replace workers who quit. But so far, we're not seeing a lot of layoffs.
FADEL: Why is that?
HORSLEY: Well, you know, employers have spent the last 2 1/2 years struggling to find workers. And Esther George, who heads the Federal Reserve Bank of Kansas City, thinks that's making businesses reluctant to let people go.
ESTHER GEORGE: I have a sense from talking to some CEOs that they are hanging onto people, and their argument is it is so hard to rehire - the experience we've had - that we'll be inclined to hang on to some of these positions. We will wait as a last resort, really, releasing people.
HORSLEY: Employers don't want to be short staffed when business picks up again.
FADEL: NPR's Scott Horsley. Thanks so much.
HORSLEY: You're welcome.
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