US job growth slows in October; unemployment rate rises to 3.9%

US job growth slows in October; unemployment rate rises to 3.9%

U.S. job growth in October was slower than expected, partly due to strikes by the United Auto Workers (UAW) union against Detroit’s “Big Three” car makers, which affected manufacturing payrolls. Wage inflation also cooled, indicating a softening in labor market conditions.

According to the Labor Department’s Bureau of Labor Statistics (BLS), nonfarm payrolls increased by 150,000 jobs in October. However, the data for September was revised downward to show 297,000 jobs created instead of the previously reported 336,000.

Economists surveyed by RushHourDaily had predicted a rise of 180,000 in payrolls. To keep up with the growth in the working-age population, the economy needs to create approximately 100,000 jobs per month.

Manufacturing employment declined by 35,000 in October, following a gain of 14,000 in September. The BLS reported that at least 30,000 UAW members were on strike during the period when business establishments were surveyed for the employment report.

The strikes have now ended, which could lead to an increase in November’s payrolls. Average hourly earnings rose by 0.2% in October, compared to a 0.3% increase in September. Over the past 12 months, wages have increased by 4.1%, slightly lower than the 4.3% rise in September. The unemployment rate rose from 3.8% to 3.9%.

This report may reinforce market expectations that the Federal Reserve will not raise interest rates further in the current cycle. The central bank recently kept rates unchanged but indicated the possibility of future rate hikes due to the economy’s resilience.

The labor market is a key factor in the economy’s strength, with GDP growing at an annualized pace of nearly 5% in the third quarter.

Although wage pressures are easing due to a larger labor pool and fewer job changes, average hourly earnings still exceed the 3.5% threshold that economists consider consistent with the Fed’s 2% target.

While wages have not been the primary driver of inflation, some economists express concerns that recent substantial contracts, such as those obtained by the UAW, airline pilots, and the UPS workers’ union, could complicate the Fed’s efforts to combat inflation.

These economists argue that the recent increase in worker productivity will not sufficiently offset higher compensation, especially as the economy becomes more service-oriented.

However, others disagree, suggesting that the record-setting contracts will only contribute to wage inflation if the Fed raises rates excessively and dampens demand. They view the UAW contract as aligning wages in the auto sector with the surge in productivity during the COVID-19 pandemic.

The article was reported by Lucia Mutikani and edited by Nick Zieminski. The Thomson RushHourDaily Trust Principles apply.

About News Team

Hi, I'm Alex Perez, an experienced writer with a focus on lifestyle and culture news. From food and fashion to travel and entertainment, I love exploring the latest trends and sharing my insights with readers. I also have a strong interest in world news and business, and enjoy covering breaking stories and events.

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