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.
Meanwhile, officials revised the August and September numbers downward by 62,000 and 39,000, respectively. So far this year, eight of the past nine months have seen lower revisions.
In October, the unemployment rate edged up to 3.9 percent, from 3.8 percent, which topped 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, from 7 percent. That was the highest reading since February 2022.
Most of the employment gains were 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. That was down from an upwardly revised 4.3 percent in the previous year. 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, from 62.8 percent. Average weekly hours dipped to 34.3 from 34.4.
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, according to WalletHub analyst Cassandra Happe.
“Record low unemployment figures should not be expected to continue much longer,” Ms. Happe said. “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 people working two or more jobs rose to 8.356 million, from 8.151 million.
Financial markets reacted favorably to the data, with the leading benchmark indexes up by 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,” Bryce Doty, the senior portfolio manager at Sit Invest, said 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, and the 30-year bond declined 11.6 basis points to 4.705 percent.
A Week of Mixed Signals
The October jobs report suggests that private employers, particularly small businesses, “are parking,” according to RedBalloon CEO Andrew Crapuchettes.“In these choppy economic conditions, they are just trying to hold onto the people they have,” he said in a statement to The Epoch Times. “This confirms the trend we have been seeing in the Freedom Economy Index, which is a joint survey with PublicSquare of over 70,000 small businesses. Record amount of small business owners are shelving their hiring plans.”
He added that he was surprised by the lackluster print because of the strong GDP report.
In the third quarter, the U.S. economy expanded by 4.9 percent.
Andrew Hunter, the deputy chief U.S. economist at London-based Capital Economics, said he thinks additional softening of the labor market is likely.
“Overall, we suspect the softening in labour market conditions has much further to run and still expect the Fed to be cutting interest rates again in the first half of next year,” Mr. Hunter wrote in a note.
Is the U.S. labor market showing signs of easing, or is it still hot? Many data points released last 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.
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 10 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,” Andy Challenger, a labor expert and Senior Vice President of Challenger, Gray & Christmas Inc., said in a statement.
In the July-to-September period, the Employment Cost Index rose at a higher-than-expected pace of 1.1 percent. Unit labor costs unexpectedly declined by 0.8 percent, and non-farm productivity surged 4.7 percent.
