Job growth slow, a mix of worry and peace

October jobs report live updates: US job growth expected to slow

The labor market has been hot ever since the US economy began to recover from the shock of the pandemic. But as the holidays are approaching, there are signs of increasing cold.

employers 150,000 jobs were added in October The Labor Department said Friday that on a seasonally adjusted basis the number was below economists’ forecasts.

Hiring figures for August and September were revised downwards, shedding more than 100,000 jobs from previous reports. And the unemployment rate, based on a survey of households, rose from 3.8 percent to 3.9 percent in September.

But there were missing factors in the data. About 96,000 people reported being out of work due to strikes or labor disputes, the most since 1997 – largely due to auto industry shutdowns.

Even with those quirks in mind, job creation still looks healthy. The three-month average – a frequent reference point for economists – is 204,000, a strong pace by historical standards. And the economy has grown employment significantly for 34 consecutive months.

“It’s a little worrying, but for now, these are still strong numbers,” Sonu Varghese, chief market strategist at asset management company Carson Group, said of the October data. “I think it’s still a generalization.”

The market reacted positively to this news. Recent dovish signs strengthened expectations that the Federal Reserve will hold off on further interest rate hikes in its fight against stubborn inflation. Bond prices rose and stocks rose for the fifth consecutive day.

Because they worry that faster income growth could lead to higher prices, Fed policymakers have been encouraged by the recent decline in wage growth. The Labor Department reports average hourly earnings in October were 0.2 percent higher than the previous month, slightly below expectations, and 4.1 percent higher than a year earlier.

Claudia Sahm, a Fed economist from 2007 to 2019 and the architect of a reliable recession indicator, said the October report does not suggest a “good direction” for the labor market. But he said it would take a long-term increase in unemployment to signal a coming recession.

The economy expanded at an annual rate of 4.9 percent from July to September Commerce Department informed Last week. The economy has defied recession forecasts throughout the year, even as inflation has remained low, dampening consumer sentiment and, to some extent, business confidence.

The economy has experienced tremendous divestment over the past few years, with the median household net worth increasing while poverty rates have risen back from their lows in 2021.

The Fed’s steep increase in interest rates — from nearly zero to more than 5 percent at the start of last year — could be felt in new ways as winter approaches, with low-income borrowers and indebted businesses looking particularly vulnerable. Car loans are prohibitively expensive for many people. The housing market has been crippled by a lack of supply and mortgage rates approaching 8 percent, virtually freezing in many areas and locking out potential middle-class home buyers.

But for homeowners, who represent two-thirds of American familiesThe average rate on outstanding mortgage loans is still only 3.6 percent as millions of people buy or refinance homes at lower-cost terms by early 2022.

Corporate America also took advantage of the days of low borrowing costs and financed companies with easy loans. But interest rates are likely to remain high for much of next year, as a growing crop of businesses need new financing. Small businesses already struggle with high debt burdens, now paying nearly 10 percent interest on short-term loans, according to the National Federation of Independent Business.

“Small businesses have faced challenges getting access to capital and managing cash flow in this environment,” John Gibson, chief executive of large payroll services company Paychex, said during a quarterly earnings call with shareholders.

Yet Mr. Gibson said that “small businesses continue to add workers at steady, but modest rates,” and he and his firm “do not see any material changes in the macro environment.”

Many market analysts are telling clients that unless there is a major shock, the economy will continue to grow, albeit at a slow pace. Layoffs, an ongoing concern, are well below the historical average. And measures of labor force productivity have also made impressive gains in recent months.

Joe Brusuelas, chief economist at accounting firm RSM, pushed back against the emerging sense of pessimism of some of the comments, saying “a solid U.S. job market is moving at a moderate pace.” “Income gains remain higher than inflation, which bodes well for consumption heading into the traditional holiday spending season.”

Last fall, mainstream surveys found that most experts had a high level of confidence that a recession was coming. This fall, forecasts for the coming year are more mixed.

In a CNBC survey of economists, Wall Street strategists and market analysts, 49 percent said they still expected a recession in the next 12 months, while 42 percent predicted a “soft landing,” in which inflation would ease without a broader contraction. Will remain.

Throughout the year, there has been a tension between poor consumer sentiment and impressive resilience in general economic data. Inflation has moderated significantly from its peak in June 2022 and commercial activity remains bright.

But many Americans are still grappling with a more structural affordability crisis — in housing, health care, child care and more — that was rampant long before this round of inflation. The cumulative increase in consumer prices in recent years has often exacerbated that conflict. The average child care payment for American families has increased by more than 30 percent since 2019, according to a report from Bank of America.

A fresh set of concerns is occupying households, markets and even the minds of economists.

The suspension of mandatory federal student loan repayment, a pandemic relief measure, ended in October and is expected to cut budgets by millions. There is a possibility of a government shutdown if Congress fails to agree on funding after November 17. If this delay occurs, it may affect the market and employment.

On the geopolitical front, “the Middle East remains a powder keg,” said David Kelly, chief global strategist at JPMorgan Asset Management, adding, “The risk is that Iran or the United States engage in direct conflict with very serious consequences.” Can.” Apart from the possible disruption in oil supply.”

Apart from any humanitarian impact, such a disruption in global oil markets could have a severe impact on US energy prices and rekindle inflation. But its impact has been limited so far, with gasoline prices actually falling in recent weeks.

Overall, it would be difficult to push the $27 trillion US economy into recession, even if downward pressures are increasing. American households, despite their various struggles, are in a healthier financial position than in 2019 across all groups.

According to the Fed, the inflation-adjusted net worth of households in the bottom quarter rose from $400 in 2019 to $3,500 in 2022 – conditions that could improve in the coming year if the job market remains intact.

Detroit’s Tenisha Hodges is among those feeling better recently. Ms Hodges, 45, worked as a hotel manager until 2020, when lockdowns prompted her to look for other work. He got a job at Chrysler with pre-tax earnings of about $16 an hour. But she was classified as a temporary employee, even though she often worked six days a week; So her benefits were limited and she says she had to take on a second job to make ends meet.

“I still had to work on Amazon Flex, maybe delivering two or three days a week,” he said.

Under a temporary contract agreement negotiated by the United Automobile Workers, temporary workers like Ms. Hodges will be allowed to achieve permanent status after 90 days, and they can reach the top of the pay scale in just three years.

For Ms. Hodges, that could mean a wage increase of more than $40 an hour.

“It’s, like, life changing,” she said. “And I love it because it now puts me in a position where I can afford to drive for the company I work for. It is a matter of great pride for me.”

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