NEW YORK (Reuters) – U.S. employers hired more workers than expected in October, but a rise in the unemployment rate to 3.7% suggested some loosening in labor market conditions, which would allow the Federal Reserve to shift towards smaller interest rates increases starting in December.
Nonfarm payrolls increased 261,000 last month, the Labor Department reported on Friday, while September was revised up to 315,000 jobs added, from 263,000 previously reported. Economists polled by Reuters had forecast 200,000 jobs. The unemployment rate increased to 3.7% from September’s 3.5% and average hourly earnings increased 0.4% after rising 0.3% in September.
MARKET REACTION:
STOCKS: S&P e-mini futures extended a gain and were last up 0.8%, pointing to a strong open on Wall Street
BONDS: The yield on 10-year Treasury note jumped was last up 5.7 basis points at 4.182%; The two-year U.S. Treasury yield ticked a bit lower but was still up 3.7 basis points from Thursday at 4.738%.
FOREX: The Euro extended a gain against the dollar to up 0.72% and dollar index extended a loss
COMMENTS:
PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK
“(There are) no major surprises here, and the good news is year-over-year wage increases have come down, which is a sign of lower wage pressures ahead despite the tight market.”
“There are signs that wage inflation has peaked, and as we move closer to recession that number should come down.”
“More and more companies are beginning to announce layoffs. That’s a prelude of what we’re going to see as we go forward. This tightness in the labor market is probably reaching its peak. The numbers will change going forward and they will have met the objective of the Federal Reserve, because Powell stressed wage pressures and the tight labor market.”
“This is an indication that with recession looming things are going to get ugly going forward. In a recession, wages don’t rise – they stagnate. This could be the last hurrah of hourly wages moving to the upside.”
“Were looking at half a percentage point (interest rate hike) in December. A recession is unavoidable. But a severe recession can be avoided.”
(Compliled by the global Finance & Markets Breaking News team)
