The pace of hiring slowed in October, in the latest sign of economic softening as the Federal Reserve continues to hike the federal funds rate.

The labor pool grew last month as well, however, and the pace of hiring ultimately translated into a 20 basis point increase in the unemployment rate to 3.7 percent. And "while still over 100 basis points below the average of the past two decades, last month's slight increase in joblessness may nevertheless be a first step toward a softer labor market," Marcus & Millichap analysts say in new research. "This is the intended outcome for the Federal Reserve, which hopes to temper wage growth, and by extension inflation, by raising companies' capital costs via higher interest rates."

Employment growth averaged 457,000 jobs per month in the first seven months of 2022 but moderated to 289,000 in July. Around 261,000 jobs were added in October, according to BLS numbers.