The U.S. economy created 150,000 new jobs in October, falling short of the consensus estimate of 180,000, according to the Bureau of Labor Statistics (BLS).
Officials also revised the August and September by 62,000 and 39,000, respectively. In total, 101,000 positions disappeared from the jobs arena. So far this year, eight of the last nine months have seen lower revisions.
In October, the unemployment rate edged up to 3.9 percent, up from 3.8 percent and higher than the market forecast of 3.8 percent.
The broader U-6 unemployment rate, which consists of those out of work, underemployed, discouraged, or marginally attached, grew to 7.2 percent in October, up from 7 percent. This was the highest reading since February 2022.
Most of the employment gains were concentrated in health care (58,000), government (51,000), construction (23,000), leisure and hospitality (19,000), and social assistance (19,000). Employment in the manufacturing sector declined by 35,000, while transportation and warehousing shed 12,000 jobs.
Annual average hourly earnings came in slightly higher than expected, but they eased to 4.1 percent. This was down from an upwardly revised 4.3 percent in the previous. On a monthly basis, average hourly earnings rose at a smaller-than-expected pace of 0.2 percent.
The labor force participation rate slipped to 62.7 percent, down from 62.8 percent. Average weekly hours dipped from 34.4 to 34.3.
While the jobless rate was below 4 percent for another month, it could be signaling that record-low joblessness will no longer be the norm. Some market observers should be prepared for a higher unemployment rate moving forward, says Cassandra Happe, a WalletHub analyst.
“Record low unemployment figures should not be expected to continue much longer,” said Ms. Happe. “The Federal Reserve rate hikes have already started a slowing of inflation, which in turn will cause unemployment numbers to increase. The hikes, coupled with the chances of a recession in the next 12 months at over 70 percent, are two leading causes of why we will see record-low unemployment come to an end sooner rather than later.”
The number of people employed part-time for economic reasons was little changed at 4.3 million. The number of individuals not in the labor force but who want a job was flat at 5.4 million. The number of persons working two or more jobs accelerated to 8.356 million, up from 8.151 million.
Financial markets reacted favorably to the data, with the leading benchmark indexes up as much as 0.5 percent. Investors hope that a further deceleration of job creation will help the Federal Reserve’s inflation fight and potentially encourage the central bank to ease its tightening efforts.
“While seemingly counterintuitive, weak job data is sparking a risk-on mentality. Today’s jobs data cements the much-needed relief from Fed rate increases,” said Bryce Doty, the senior portfolio manager at Sit Invest, in a note. “Credit spreads should continue to rachet in and bond yields will come down as investors see it as now safe to pile into bonds.”
U.S. Treasury yields continued to trend lower to finish the trading week. The benchmark 10-year yield fell about 14 basis points to below 4.53 percent. The 2-year yield slumped nearly 11 basis points to 4.87 percent, while the 30-year bond declined 11.6 basis points to 4.705 percent.
For inflation to stabilize and return to the 2 percent target rate, the Fed has stated that the U.S. economy needs to experience below-trend growth and softer labor market conditions.
A Week of Mixed Signals
Is the U.S. labor market showing signs of easing, or is it still hot? Many data points released this week offered mixed signals on the state of the jobs arena.
In September, the number of job openings increased slightly, rising by 56,000 to 9.55 million and topping market forecasts of 9.25 million. Job quits were little changed at 3.661 million.
The ADP National Employment Report showed that private-sector hiring came in below expectations. In October, the payroll process reported that private businesses added 113,000 workers to their payrolls, falling short of the consensus estimate of 150,000. This was up from the September gain of 89,000.
Layoffs slowed last month, with U.S.-based employers announcing plans to cut 36,836 jobs, the smallest number in three months. Year-to-date, companies have announced 641,350 job cuts, up 164 percent from the first ten months of 2022. This represented the highest January-to-October number since 2020 and the second highest since 2009.
“Job cut plans have slowed significantly since the first half of the year, and consumers have continued to spend, even in the face of high inflation. Pandemic savings and higher wages have gotten many workers through economic uncertainty,” said Andy Challenger, a labor expert and Senior Vice President of Challenger, Gray & Christmas, Inc., in a statement.
Third-quarter labor statistics were also published.
The Employment Cost Index (ECI) rose at a higher-than-expected pace of 1.1 percent in the July-to-September period. Unit labor costs unexpectedly declined 0.8 percent, while non-farm productivity surged 4.7 percent.
From The Epoch Times