150K JOBS BOOST

Rate hike still in play

The US economy added 150,000 jobs in October, proving that September’s blowout payroll gains were only temporary as the Federal Reserve hedges on one more interest-rate hike by the end of the year.

October’s payroll gain was slightly below the 157,000 jobs gains economists expected — though September’s additional 336,000 jobs were nearly double economists’ predictions, according to fresh data released by the Bureau of Labor Statistics on Friday.

The labor force participation rate was unchanged at 62.7%, and the Labor Department also reported that US average hourly wages rose 0.2% in October compared with the previous month’s.

Wages were also up 4.1% compared with those of a year ago, to $34 — slower than last year’s pace, but well ahead of the pre-pandemic level.

Payroll in September and August was revised down by 39,000 and 62,000, respectively.

With these revisions, employment over the past two months combined is 101,000 lower than previously reported, the federal agency said.

The report also showed that the unemployment rate rose to 3.9% — slightly above the 3.8% rate that held steady in August and September, and that had ticked higher from 3.5% in July.

According to Bloomberg economists, the increase signals a greater likelihood of a recession by year-end, based on historical data.

Good week for stox

Despite that, stocks climbed Friday and had their best week of 2023 as investors grew hopeful the Fed was done with its rate-hiking campaign. The Nasdaq finished the week with a gain of 6.6%, while the Dow and S&P 500 both advanced more than 5%.

Fed officials have said that they are no longer forecasting a recession and have been keeping tabs on data points such as the jobs report and Consumer Price Index — a closely watched measure of inflation that tracks changes in the costs of everyday goods and services.

Strong hiring can often fuel inflation if companies feel compelled to raise pay to attract and keep workers, making it more difficult for the Fed to reach its 2% inflation target without pushing the benchmark federal funds rate beyond its current 22year high, between 5.25% and 5.5%.

Thus, the latest sign that the pace of hiring is losing some momentum — without going into a nosedive — would no doubt be welcomed by the Fed.

On Wednesday, Fed officials decided to hold interest rates steady for the second consecutive meeting.