MANHATTAN (CN) — Following a huge gain in jobs in September, the employment numbers for October were lower than expected and show an economy that is suddenly receding. Yet they still mark the 34th straight month of job gains.
The U.S. economy added 150,000 jobs last month, according to the Bureau of Labor Statistics, slightly lower than the 170,000 jobs most economists predicted. The unemployment rate remained little changed at 3.9%, after it hit a historic low of 3.4% in April.
Friday’s jobs report follows a blockbuster reading last month, which showed the U.S. added 336,000 positions in September, and marks the end of four straight months of gradually increasing job gains. The jobs reports for September and August were also revised downward by about 100,000 jobs — August by 62,000 jobs, and September by 39,000 — taking some of the shine off those numbers.
“To some extent this was already in the cards, and even at the lower current level, job growth is still reasonably health,” said Brad McMillan, chief investment officer for Commonwealth Financial Network.
That said, “when you look at the details, we can see a continued slowdown,” he added, pointing to the rising unemployment rate and revisions to August and September. “The real takeaway from this labor report is that while the market is still fairly healthy, the slowdown is real, and may be accelerating.”
That doesn’t mean that more blockbuster jobs reports could not drop later this year or early in 2024, though, as the economy added more than half a million jobs last January, then fell to half that amount before starting a string of increasingly larger employment gains.
Earlier in the week, the employment report from payroll company ADP showed private companies added 113,00 jobs last month, less than expected. The service industry represented nearly all the jobs gained, with manufacturing producing just 6,000 of the jobs. The breakdown by company size favored medium-sized businesses with 50 to 499 employees.
Pay growth also slowed to a two-year low last month, according to ADP, with employees who remained at their jobs reporting a 5.7% year-over-year increase in pay. Those who left their jobs were able to get an 8.4% increase in pay, the smallest such gain since July 2021, ADP reported.
“No single industry dominated hiring this month, and big post-pandemic pay increases seem to be behind us,” Nela Richardson, ADP’s chief economist, said in a statement. “In all, October’s numbers paint a well-rounded jobs picture. And while the labor market has slowed, it’s still enough to support strong consumer spending.”
Experts say the slowdown reflected in the ADP report likely was caused by the automaker strike, as the Midwest saw a large drop in jobs.
Also earlier in the week, the Labor Department released its job openings and labor turnover survey, known as the JOLTS, which showed little change in the number of job openings at 9.5 million. However, there were still more job openings than available workers. The quits rate also held steady at 3.5 million, indicating wage growth will continue to moderate, experts say.
Between the moderating jobs repots and the still-strong JOLTS report, many are worried the Federal Reserve will continue to hike interest rates to try to drive down inflation. However, the Fed did not do so during its Nov. 1 meeting.
“We don’t expect further Fed rate hikes, but risks continued to be tilted in that direction,” wrote Nancy Van Houten, economist at Oxford Economics, wrote in an investor’s note on Wednesday. “The Fed needs to see more evidence of slower job and wage growth to be convinced that inflation is on a sustainable path back to 2%.”
The Federal Reserve has raised interest rates 11 times since March 2022 — it currently sits at the 5.25% to 5.5% range — and meets for the last time this year in December. Many analysts hope for the Fed to once again pause its rate hikes, but some now worry that won't be the case.
The BLS report also cited the strike. “Employment in manufacturing decreased by 35,000 in October, reflecting a decline of 33,000 in motor vehicles and parts that was largely due to strike activity,” the report noted.Follow @NickRummell
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