Data published today by the Bureau of Labor Statistics indicates that the US economy added 263,000 jobs in September, which is roughly in line with expectations, and the unemployment rate ticked down one-tenth of a percentage point to 3.5 percent. This data suggests that the labor market remains strong but that growth may be slowing, which is consistent with the goal of cooling the economy to combat inflation. Here are three things you should know about this report:

1. The job growth seen in October represents a slight slowing of job creation from previous months (average job gains over the previous three months was 382,000). Likewise, wage growth cooled slightly, with nominal wages growing by 0.3 percent (an annual rate of 3.8 percent.) One month of data doesn’t indicate a trend, but if the next few months show similar changes then the labor market will be weakening, which is the anticipated response to the aggressive interest rate hikes being employed by the Federal Reserve.   
2. The slight change in course suggested by this new data won’t be enough to cause the Federal Reserve to reconsider the large (0.75) interest rate hike that is expected next month. Yesterday, Federal Reserve Board Governor Christopher J. Waller remarked that the plan to raise rates is predicated on the expectation of seeing a jobs report just like the one that was released.
3. In “normal” times, we celebrate strong job growth and low unemployment rates, so it might be puzzling to some why this slow down in job growth is being celebrated as good news. The difference is that today we are seeing historic levels of inflation that pose a greater risk to our economy than a few tenths of a percentage point of unemployment. This new data gives us hope that the rate hikes employed by the Federal Reserve are working to slow the economy, which is generally believed to be the only way to fight the inflation that has taken hold. Policymakers are in the unenviable position of having to slow the economy, making some individuals arguably worse off, in order to prevent the widespread and catastrophic effects of inflation.

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