US Added 261K Jobs in October, Topping Expectations for 200K

The U.S. economy added 261,000 jobs in October, beating economist forecasts for 200,000. The unemployment rate rose to 3.7% versus expectations for 3.6%

After an initial dip of about $200, bitcoin (BTC) has bounced to its pre-report level, currently trading at $20,700. While the headline 261,000 jobs growth suggests the U.S. Federal Reserve has plenty more to do to battle inflation, at least one economist – Dartmouth Professor Danny Blanchflower – takes note of the rising unemployment rate and a sizable decline in the household survey of 325,000 jobs. "We are now in a position ... to expect the Fed to go into full reverse gear as the labor market is set to crash," he tweeted. "Rate cuts are coming," he added.

Checking two metrics of particular concern for the Fed, average hourly earnings rose 0.4% in October versus expectations for 0.3%, suggesting a continuation of inflationary pressures. And the labor force participation rate – which the Fed would like to see rise as that might put a damper on wage growth – ticked down to 62.2%.

“Although job vacancies have moved below their highs and the pace of job gains has slowed from earlier in the year, the labor market continues to be out of balance, with demand substantially exceeding the supply of available workers,” Fed Chair Jerome Powell said earlier this week.

On Wednesday, the Federal Open Market Committee (FOMC) decided on a fourth consecutive 75 basis point interest rate increase in its continued effort to slow inflation by slowing the economy.

However, both in its meeting statement and in Powell's post-meeting press conference, the Fed indicated it's mulling a slower pace of rate hikes, perhaps starting as soon the December FOMC meeting.

Powell on Wednesday said he's more concerned with how high interest rates need to go rather than the pace of tightening, a shift from previously where talked about the Fed’s approach of “front-loading,” meaning that rates need to go higher faster.

“While more hikes are on the way they are likely to be smaller from now on,” said Brian Coulton, chief economist at Fitch Ratings. “That said, there is nothing in there to suggest any desire to pivot to rate cuts later in 2023 – rates are more likely to be on hold through the rest of next year.“