WASHINGTON — Private businesses created more U.S. jobs in October than in September, and far more than expected, suggesting that the job market is not weakening, despite the economic slowdown caused to stem high inflation.
In October, 239,000 jobs were created by private companies, according to the monthly ADP/Stanford Lab survey published on Wednesday, two days before the official employment figures.
This is more than the 195,000 job creations that were expected, and it is up from the 192,000 jobs created in September, according to figures revised downwards.
“This is a very high figure given the maturity of the economic recovery, but hiring has not been generalized”, nuance Nela Richardson, chief economist of ADP, quoted in the press release.
Thus, job creations are down in the manufacturing sector, which is sensitive to interest rates. In addition, employees who leave their employer to be better paid in another company “require lower compensation gains” than before, details the economist.
The employment situation is under close scrutiny in the current context of high inflation, and while employers have been facing a major labor shortage for more than a year.
A deterioration in the labor market is, paradoxically, desired and expected, because it would reflect the impact of the measures taken by the American central bank (Fed) to slow down inflation and consumption by raising its interest rates.
“While we are seeing the first signs of a Fed-induced slowdown in (labour) demand, this is only affecting certain sectors of the labor market,” continues Nela Richardson.
The Fed is expected to announce, Wednesday afternoon after a two-day meeting, a new strong increase in its key rate. But the US economy risks plunging into recession in 2023.
Official US employment figures for October will be released on Friday. The jobless rate is expected to hold steady at 3.5%, its pre-pandemic level, and the lowest in more than 50 years. Job creations, private and public sectors combined, are on the other hand expected to fall, to 205,000 against 263,000 in September, according to the consensus of analysts from MarketWatch.
Inflation is the main concern of American households, less than a week before the midterm elections. The country’s economic situation could cause President Joe Biden to lose his slim Democratic majority in Congress.