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In October, the increase in US payrolls decelerated, and the manufacturing sector faced setbacks.

In October, the increase in US payrolls decelerated, and the manufacturing sector faced setbacks.

The October employment report did not meet expectations, showing a 150,000 rise and indicating a varied condition of the labor market.

Highlights

  • Nonfarm payrolls increased by 150,000, while the unemployment rate stood at 3.9%.
  • Healthcare employment experienced growth, but the manufacturing sector faced a decline.
  • Average hourly earnings saw a slight increase, reaching $34.00.

October Labor Market Update

In October, the US labor market demonstrated a mixed performance, with nonfarm payroll employment increasing by 150,000 jobs, falling short of both pre-report estimates and the average monthly gain over the past year. The unemployment rate remained relatively stable at 3.9%, showing a slight increase from earlier lows in the year, as stated by the US Bureau of Labor Statistics.

Sectoral Shifts in Employment

Job growth was noted in the healthcare, government, and social assistance sectors, while manufacturing encountered challenges, mainly due to strike actions. The healthcare sector consistently added jobs, contributing 58,000 new positions to the economy in line with its 12-month trend. Government jobs experienced an increase of 51,000, returning to pre-pandemic levels, notably driven by growth in local government positions. Social assistance roles saw a slight increase of 19,000, slightly below the sector's yearly average. Conversely, there was a decline in manufacturing jobs, with the motor vehicles and parts subsector being significantly impacted by strikes.

Worker Demographics and Wages

Unemployment rates among different worker groups such as adult men, women, teenagers, and across various ethnicities remained relatively stable. The number of permanent job losses increased, and the long-term unemployed made up 19.8% of the jobless. Average hourly earnings experienced a modest increase of 0.2% to reach $34.00, reflecting a 4.1% growth over the past 12 months.

Construction and Hospitality

The construction industry sustained its steady growth with a 23,000 job increase, reflecting consistent positive momentum. However, employment levels in leisure and hospitality remained stagnant, with a minor increase that falls short of the sector's 12-month average.

Revision of Past Data and Short-term Forecast

Revisions to data from previous months led to a combined downward correction of 101,000 jobs for August and September. With these adjustments and the performance of the current month, there is a cautiously optimistic outlook for the labor market.

Despite the slower pace, the job growth in multiple sectors indicates underlying resilience. However, the decline in manufacturing and the stagnant wage growth suggest potential caution, implying a near-term outlook that leans slightly bearish, particularly for industries sensitive to consumer spending and manufacturing output.

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