U.S. job growth slows down with unemployment rate hitting two-year high
2023.11.05 13:23
The U.S. labor market experienced a slowdown in October, with job growth significantly underperforming, according to the Labor Department’s report. A total of 150,000 jobs were added, marking the smallest gain since June and falling short of the expected 180,000. Concurrently, the unemployment rate rose to a two-year high of 3.9%, reflecting a cooling labor market.
The automobile industry was particularly impacted due to the United Auto Workers strike, which accounted for approximately 33,000 fewer workers. Manufacturing overall lost 35,000 jobs, largely attributed to strikes against Ford (NYSE:), Stellantis (NYSE:), and General Motors (NYSE:). The information sector also saw declines due to strikes by Hollywood writers and actors.
Despite these challenges, some sectors witnessed significant job gains. Health care added a substantial 58,400 jobs, specifically in hospitals, physicians’ offices, and home health care services. Government hiring also increased with an addition of 51,000 jobs, particularly in local government education. The construction sector gained 23,000 jobs with specialty trade contractors leading the growth.
Other sectors such as wholesale trade, professional and business services, and social assistance also experienced job gains, while job losses were noted in financial activities and transportation and warehousing which lost 12,000 jobs.
Average hourly earnings rose by 4.1% from a year ago and labor force participation fell slightly to 62.7%. These trends have been closely scrutinized by economists such as Bill Adams of Comerica (NYSE:) Bank and Kenny Polcari of SlateStone Wealth in relation to the Federal Reserve’s inflation battle.
Curt Long, NAFCU’s VP-Research and Chief Economist suggested that if this trend continues despite rates currently being at a 22-year high, the Federal Open Market Committee (FOMC) might consider a rate cut by Q1. This comes after the FOMC adjourned its last meeting without increasing rates.
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