US jobs rose by 150,000 jobs in October, less than expected

US jobs rose by 150,000 jobs in October, less than expected

US jobs rose by 150,000 jobs in October, less than expected
The US economy saw job creation slow in October, confirming ongoing expectations of a slowdown and perhaps relieving some pressure on the Federal Reserve in its battle against inflation.

The Labor Department reported Friday that nonfarm payrolls increased by 150,000 during the month, versus the Dow Jones forecast for a rise of 170,000. The United Auto Workers strikes were primarily responsible for this gap, as the impasse meant a net loss of jobs in the manufacturing sector.

The unemployment rate rose to 3.9%, the highest level since January 2022, against expectations for it to stabilize at 3.8%. Employment as measured by the Household Survey, which is used to calculate the unemployment rate, showed a decline of 348,000 workers, while the number of unemployed rose by 146,000.

The more general unemployment rate, which includes discouraged workers and those holding part-time jobs for economic reasons, rose to 7.2%, an increase of 0.2 percentage points. The labor force participation rate fell slightly to 62.7%, while the labor force shrank by 201,000.

“The winter chill is hitting the job market,” said Becky Frankiewicz, chief commercial officer at staffing firm ManpowerGroup. “The post-pandemic hiring frenzy and summer hiring warmth have subsided, and companies are now holding on to employees.”

Average hourly earnings, a key measure of inflation, rose 0.2% during the month, below expectations of 0.3%, while the 4.1% increase year-on-year was 0.1 percentage point above expectations. The average work week fell to 34.3 hours.

The Fed uses wage data as one component of its inflation monitoring. The central bank chose not to raise interest rates at its last two meetings even though inflation was well above its 2% target. After Friday’s jobs data, markets cut the probability of a December rate hike to just 10%, according to a CME Group gauge.

Markets reacted positively to the report, with futures linked to the Dow Jones Industrial Average adding 100 points.

From a sector perspective, healthcare led with 58,000 new jobs. Other major gainers included government (51,000), construction (23,000) and social assistance (19,000). The leisure and hospitality sector, which was one of the biggest job gainers, also added 19,000 jobs.

Manufacturing recorded a loss of 35,000, all but 2,000 of which came from automobile strikes. The transportation and warehousing sector saw a decline of 12,000 while information-related industries lost 9,000.

“After years of astonishing strength, the labor market may finally be slowing,” said David Russell, global head of market strategy. “The major misses, combined with downward revisions and rising unemployment, send a strong message to (Chair) Jerome Powell and the Fed.” In Tradestation. “Further tightening now is highly unlikely, and interest rate cuts could be back on the table next year.”

In addition to the slowdown in October, the Bureau of Labor Statistics revised its numbers for the previous two months: the new September total is 297,000, from the initial 336,000, while August came in at 165,000 from 227,000. Combined, the revisions reduced the original estimate by 101,000.

Job creation has skewed heavily toward full-time workers, reflecting the recent trend. Full-time jobs rose by 326,000 jobs, while part-time jobs fell by 670,000 jobs as seasonal jobs ended in the summer.

The report comes at an important time for the US economy.

After a third quarter in which GDP expanded at an annual rate of 4.9%, better than expected, growth is expected to slow significantly. A Treasury Department report earlier this week projected expected fourth-quarter GDP growth at just 0.7%, and 1% for the full year 2024.

Federal Reserve policymakers have deliberately tried to slow the economy in order to address inflation. On Wednesday, the Federal Reserve’s interest rate-setting committee chose to hold its line for the second straight meeting after a string of 11 hikes since March 2022.

Markets expect that the Fed is likely finished raising interest rates, although central bank officials insist that they are relying on incoming data and could still raise rates further if inflation does not show consistent signs of declining.

Inflation data has been mixed lately. The Fed’s preferred measure showed the annual rate falling to 3.7% in September, a sign of steady but slow progress toward its target.

Surprisingly strong consumer spending has helped push prices higher, as strong demand has given companies the ability to charge higher prices. However, economists fear that rising credit card balances and increased withdrawals from savings will slow spending in the future.

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    (tags for translation) Employment costs 

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