The U.S. economy created 150,000 jobs in October, the Labor Department reported on Friday, marking a larger-than-expected slowdown from September amid auto strikes and moderation in the leisure and hospitality sector.
Economists had expected the U.S. economy gained 180,000 jobs last month, while 297,000 were added in September, according to revised numbers. The unemployment rate was 3.9%, compared with 3.8% in September and the 3.8% consensus call among economists surveyed by FactSet.
In addition to revising the September hiring figure from the 336,000 it originally reported, the Bureau of Labor Statistics also reduced the previously reported August payrolls number by 62,000. With those changes, the combined employment gain in August and September is 101,000 lower than previously reported.
The 150,000 payroll gain in October is below the average monthly pace of 258,000 jobs added over the prior 12 months, according to Friday’s report. Declines in employment in manufacturing were a big factor in the slower pace of hiring, largely due to the 40,000 auto workers on strike during the month. At the end of October, the United Auto Workers union reached tentative agreements with
Ford Motor
(ticker: F), General Motors (GM), and
Stellantis
(STLA) to end the strike after more than 40 days.
While manufacturing declined, healthcare and the government were areas that notably added jobs last month.
October’s total labor force participation rate was 62.7%, down slightly from the 62.8% recorded in September. The labor force participation rate, however, still remains below pre-Covid levels—indicating that if Americans continue to come back into the labor force, it could further pressure labor markets.
Not only did payroll gains moderate in October, the rate at which wages are rising also slowed slightly. Average hourly earnings, a metric Federal Reserve officials watch closely because growth in wages feeds directly into inflation for services, rose 0.2% in October. That’s lower than the 0.3% month over month gain expected and lower than the 0.3% pace set in September.
In the past 12 months, wages have increased by 4.1%. Economists surveyed by FactSet estimated year-over-year wage growth would fall to 4% in October from the 4.3% rate seen in September.
The slowing wage gains are good news for not only central bank officials looking to see more modest pay increases, but also for Fed watchers and investors looking to avoid a rate hike in December. One reason why September’s big jump in hiring didn’t lead the Fed to raise rates at this week’s monetary-policy meeting was that wage growth had moderated, suggesting the labor market remained strong but not wasn’t overheating in a way that would add to inflation.
“This report shows that the economy is slowing from its prior red-hot pace, but that’s just normalization rather than anything recessionary,” writes Sonu Varghese, global market strategist at Carson Group.
Write to Megan Leonhardt at [email protected]
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