The U.S. witnessed its lowest job growth rate for the month of October. While 150,000 jobs were added to the economy, the unemployment rate increased to 3.9%, the highest level since January 2021. It was expected that the month would hold on to the 3.8% unemployment rate seen in September.
This number is significantly lower than the growth seen in the month of September, which was reported at 297,000. The government suggested that the labor market is weaker than it had previously appeared.
The Federal Reserve decided last week and in September to hold rates steady to anticipate how earlier rate increases will affect the economy.
The unemployment rate for October indicates that there was an increase in layoffs. Households surveyed showed that the amount of workers laid off rose by 92,000 when compared to the month of September.
The economy saw gains in the number of jobs created in healthcare, government and social assistance. This increase has been expected since there has been a need to fill vacant positions in these fields. October saw a decline in manufacturing jobs related to the UAW strike against Ford, Stellantis and General Motors.
October also saw a decrease in the amount of jobs filled in transportation and warehousing, information and finance.
The Fed has been working on cooling off the demand for labor, fearing that an increase in wages could negatively affect inflation.
Both the Fed and the Bank of England announced that they were leaving interest rates unchanged, as inflation eases and the global economy begins to slow down.
“The October jobs report showed a clear softening in labor market conditions with markedly slower hiring, cooling wage growth, an uptick in the unemployment rate and a shorter workweek,” said Lydia Boussour, EY chief economist. “Looking ahead, we foresee softer labor market conditions with further hiring freezes and strategic resizing decisions along with some continued moderation in nominal wage growth.”
ADP’s chief economist, Nela Richardson said that the pay increases seen post-pandemic are starting to disappear and normalize. While the labor market has decreased, she predicts that it will not slow down consumer spending.