In a disappointing economic report, the Bureau of Labor Statistics (BLS) revealed anemic job growth in October, with nonfarm payroll employment increasing by a mere 12,000.
- This marks a significant drop from September’s revised gain of 223,000, making October the weakest month for job creation since December 2020, when the economy shed 240,000 jobs.
- The unemployment rate remained at 4.1% for the second month in a row, but October’s job growth miss raises questions about the strength of the economy heading into the winter.
Big Miss: Economists had expected a modest increase of 113,000 new jobs for the month, but the stark shortfall raises concerns about the labor market’s resilience amid tightening economic conditions.
Mixed Month: The healthcare industry continued its expansion with 52,000 new positions, in line with its average monthly gain of 58,000 over the past year. Government hiring contributed 40,000 jobs, while construction posted a modest 8,000 increase.
- On the flip side, professional and business services contracted significantly, shedding 49,000 jobs, while manufacturing lost 46,000.
Wages: Though job creation faltered, wages climbed, with average hourly earnings for private nonfarm payrolls rising by 0.4% in October, up from a 0.3% increase in September.
- This marks the fourth time this year that monthly wage growth has reached 0.4%.
- Year-over-year wage growth in October stood at 4.0%, the highest since May, up from 3.9% in September.
Revisions: Adding to the soft October data, the BLS issued notable downward revisions for the previous months. August job growth was revised down by 78,000 to 81,000 jobs. September’s figure was also adjusted down by 31,000, bringing it to 223,000. Together, these revisions reveal that employment in August and September combined was 112,000 lower than previously reported.
Weather Woes: According to the BLS, no modifications were made to either the establishment or household survey procedures for October’s data. “No changes were made to either the establishment or household survey estimation procedures for the October data. It is likely that payroll employment estimates in some industries were affected by the hurricanes; however, it is not possible to quantify the net effect on the over-the-month change in national employment, hours, or earnings estimates because the establishment survey is not designed to isolate effects from extreme weather events.”
Looking Ahead: The October data suggests a cooling labor market that may signal caution for the Federal Reserve as it assesses its next move on interest rates next week. While a strong September jobs report opened up the possibility that the Fed could hold rates at their November meeting, October’s report along with a slowing inflation and a cooler Q3 the market is now almost 100% convinced that the Fed will opt for a 25 basis cut next week.
