October Jobs Report: US job growth shows signs of slowing

October Jobs Report: US job growth shows signs of slowing

The increase was slightly smaller than economists had expected, but not much different from the type of monthly job growth the U.S. economy was seeing before the pandemic.

The unemployment rate, based on a household survey, rose to 3.9 percent from 3.8 percent in September. It has been below 4 percent for nearly two years, a stretch not achieved since the late 1960s.

Figures for August and September were revised downwards, with a total of more than 100,000 from previous reports. The surprisingly strong September gain, initially reported at 336,000, has been restated to 297,000 and will be revised again next month.

“This is somewhat concerning, but at the moment, these are still strong numbers,” said Sonu Varghese, chief market strategist at Carson Group, an asset management firm. “I think this is still just normalization.”

Average hourly earnings rose 0.2 percent from the previous month, slightly less than expected, and were 4.1 percent higher than a year earlier, slightly beating expectations.

October’s numbers may have been kept low because the survey was conducted during major business interruptions — particularly the United Auto Workers strikes and related layoffs. Since then, the UAW has reached tentative contract agreements with the Big Three U.S. automakers and has asked striking members to return to their jobs.

About 96,000 people reported being unemployed due to a strike or labor dispute in October, the most since 1997.

Claudia Sahm, an economist at the Federal Reserve from 2007 to 2019 and the architect of the reliable recession indicator, said the report does not indicate a “good trend” for the labor market. But she added that unemployment would have to rise over a longer period for it to be clear that recession risks have increased.

Throughout the year, the economy defied expectations of contraction, even as inflation persisted, dragging down consumer sentiment and, to some extent, business confidence.

The economy has also seen a massive split in the past two years, with median household net worth rising while the poverty rate has risen from its lows in 2021. This is partly because the bottom third of households have exhausted their savings accumulated during the crisis. The pandemic and increased borrowing to stay afloat.

The Federal Reserve’s massive interest rate hike since early 2022 looms large over vulnerable borrowers and businesses as winter approaches.

However, several market analysts were telling clients on Friday that unless a major shock occurs – or household savings drain faster than expected – the economy may continue to move, albeit at a more sluggish rate.

After nearly two years of lagging inflation, recent wage gains have on average outpaced the pace of price increases, and demand for workers continues. Layoffs, currently, are well below historical averages. Workforce productivity measures have also made impressive gains in recent months.

“The solid US jobs market is progressing, albeit at a moderate pace,” said Joe Brusuelas, chief economist at accounting firm RSM, countering the prevailing gloomy sentiment. “Income gains continue to outpace inflation, which bodes well for consumption as the traditional holiday spending season approaches.”

On a more technical level, Mr. Brusuelas added, the report “reaffirms the direction of monetary policy” from the Fed, which has recently been cautious about raising interest rates further. Financial markets rebounded after this news.

Last fall, the vast majority of economists in mainstream polls had a high level of confidence that a recession was coming. This fall, expectations for next year have become more mixed.

In a CNBC poll of Wall Street economists, strategists and market analysts, 49% said they still expect a recession in the next 12 months, while 42% expect a “soft landing,” in which inflation continues to decline without widespread contraction. the range.

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