The Wall Street Journal on the labor market (Nov. 4):

The Labor Department reported Friday that the economy created 261,000 new jobs in October, which beat Wall Street’s expectations. Upward revisions for September added to the evidence that the job market is holding up despite rising interest rates.

But hold the confetti. The labor market also showed the beginning of some cracks, as the unemployment rate rose to 3.7% from 3.5% and 328,000 fewer people were employed. The labor participation rate fell for the second month in a row, and unemployment ticked up for nearly every demographic group except teenagers. This evidence suggests that while employers are still hiring, the pace of hiring is slowing.

The upshot is that the job market is headed for harder times as the Federal Reserve’s interest-rate increases continue. Companies are already reporting job freezes and in some cases layoffs, especially in the tech industry, where stock prices have been hammered this year.

Elon Musk sent sacking notices to 3,700 Twitter employees Friday, about half the workforce. Amazon said it is pausing new hires for the corporate workforce, citing the “unusual macroeconomic environment.” Lyft is laying off workers, as is CNN. The larger story is that companies are putting up the storm windows in case there’s a recession coming in 2023, which there may be.

The mixed jobs news is unlikely to deter the Federal Reserve from its drive to restrain inflation. Average hourly earnings rose at a healthy 4.7% rate in the past year, which is good news for workers but not for inflation. Wage pressure continues across the economy, especially for workers who leave for new jobs. The Atlanta Fed’s tracker has wage growth growing at an annual rate of 6.3% in the three months through September. Workers should enjoy the gains while they can because there are rougher days ahead as the Fed moves to fix Washington’s great inflation mistake.