US labour market loosens as job gains slow

AFP  :
Job seekers read instructions during a career fair where job seekers can meet with prospective employers during a City of Los Angeles career fair offering to fill vacancies in more than 30 classifications of jobs on 2 November 2023 in Los Angeles, California.AFP
US job growth slowed in October in part as strikes by the United Auto Workers (UAW) union against Detroit’s “Big Three” car makers depressed manufacturing payrolls, and the increase in annual wages was the smallest in nearly 2-1/2 years, pointing to an easing in labour market conditions. The Labour Department’s closely watched employment report on Friday also showed the unemployment rate rising to 3.9 per cent last month, the highest level since January 2022, from 3.8 in September. The economy added 101,000 fewer jobs in August and September than previously estimated, also suggesting slowing labour market momentum. The report strengthened financial market expectations that the Federal Reserve is done raising interest rates for the current cycle, and improved the chances of the US central bank engineering a “soft-landing” for the economy rather than plunging it into recession as some economists had feared.
“This is a very Fed-friendly report,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “The only wrinkle is that the labour force shrank. Still, the overall softness in the report will go a long way to keeping the Fed on the sidelines for a third straight meeting in December.”
Nonfarm payrolls increased by 150,000 jobs last month after rising by 297,000 in September, the Labour Department’s Bureau of Labour Statistics said. Economists polled by Reuters had forecast payrolls would rise by 180,000.
About 52.0 per cent of private sector industries reported increases in employment, the lowest since April 2020, compared to 61.4 per cent in September, the survey of establishments showed.
Manufacturing employment dropped 35,000, with the UAW strike at Ford Motor F.N, General Motors GM.N and Chrysler parent Stellantis STLAM.MI factories as well as at Mack Trucks plants subtracting 33,000 jobs.
In addition to the industrial action, which has since ended, the slowdown in employment gains last month was pay-back after September’s gains, which were the largest in eight months.
Though hiring is slowing as a result of the cumulative impact of rate hikes from the Fed, payroll gains remain way above the roughly 100,000 jobs per month needed to keep up with growth in the working-age population.
“A payroll increase of 150,000 is not bad, and 180,000 – what it would have been without the strike and ancillary impacts – is solid,” said Chris Low, chief economist at FHN Financial in New York. “So, no need to worry about excessive weakness at least until we see what the post-strike environment looks like.”
Last month’s increase in hiring was led by the healthcare sector, which added 58,000 jobs, the bulk of them in ambulatory health care services. Employment in government increased by 51,000 positions, returning to its pre-pandemic level. The rise in government payrolls was driven by local government hiring.
The construction industry added 23,000 jobs. There were also gains in social assistance as well as professional and business services payrolls, with temporary help jobs – a harbinger of future hiring – rebounding after eight straight monthly declines. Leisure and hospitality employment rose 19,000, well below the monthly average of 52,000 in the last 12 months.
The transportation and warehousing industry suffered job losses as did the information industry, continuing to be weighed down by an ongoing strike in Hollywood.
Financial markets overwhelmingly expect the Fed to keep rates unchanged in December and January, according to CME’s FedWatch Tool.