U.S. job growth slowed in October, with nonfarm payrolls increasing by 150,000 jobs, compared to a rise of 297,000 jobs in September. The slowdown was partly due to strikes by the United Auto Workers (UAW) union against Detroit’s “Big Three” car makers, which depressed manufacturing payrolls. Additionally, the increase in annual wages was the smallest in nearly 2-1/2 years, indicating an easing in labor market conditions. The unemployment rate rose to 3.9% from 3.8% in September, the highest level since January 2022. The report suggests that the Federal Reserve may be done raising interest rates for the current cycle in order to maintain a “soft-landing” for the economy.
The strike by the UAW at Ford, General Motors, and Stellantis factories, as well as at Mack Trucks plants, led to a drop of 35,000 jobs in the manufacturing sector. The report also revealed that the economy added 101,000 fewer jobs in August and September than previously estimated, indicating a slowing in labor market momentum. Despite this, payroll gains remain above the level needed to keep up with the growth in the working-age population. The healthcare sector led the increase in hiring, adding 58,000 jobs, while the construction industry added 23,000 jobs. Government employment increased by 51,000 positions, driven by local government hiring.
Average hourly earnings rose by 0.2% in October, the smallest increase since June 2021, and wages increased by 4.1% year-on-year. The average workweek shortened slightly and aggregate hours worked fell, reflecting the impact of the auto strikes on the economy. While wage pressures are easing due to a larger labor pool and fewer job changes, average hourly earnings growth remains above the level consistent with the Federal Reserve’s 2% inflation target. Despite the slowdown in job growth, economists do not anticipate a recession, but rather a significant deceleration in growth in the fourth quarter.
