Only about 12,000 jobs were added to the U.S. economy in October, far below expectations, while the unemployment rate remained unchanged at 4.1%, according to the U.S. Bureau of Labor Statistics.
Employment continued to trend up in the health care and government sectors, but decreased in temporary help services and manufacturing, due mainly to strike activity.
The number of unemployed people was little changed, at 7 million.
In October 2023, the jobless rate was 3.8%, and the number of unemployed was 6.4 million.
The number of long-term unemployed (those jobless for 27 weeks or more) was also little changed, at 1.6 million. This measure is up from 1.3 million a year earlier.
In October, the long-term unemployed accounted for 22.9% of all unemployed people.
Both the labor force participation rate, at 62.6%, and the employment-population ratio, at 60%, were flat in October. These measures have been basically flat for all of 2024.
Wages continued to increase slowly: In October, the average hourly wage for all employees on private non-farm payrolls rose by 13 cents, or 0.4%, to $35.46.
Over the past 12 months, average hourly earnings have increased by 4%.
In October, the average hourly wage of private-sector production and nonsupervisory employees rose by 12 cents, or 0.4%, to $30.48.
“The number of new jobs created in October, an increase of 12,000, was well below consensus forecasts of 117,500 jobs,” says Mark Fleming, chief economist for First American, in a statement. “Additionally, August and September’s jobs data were revised downward significantly by 112,000 compared to what was initially reported. However, temporary shocks like Hurricanes Helene and Milton and the ongoing Boeing strike all likely distort the headline results, so it’s hard to know the ‘true’ rate of job creation in October.
“However, other labor market indicators, such as the October Job Openings and Labor Turnover Survey (JOLTS), show a gentle cooling of the labor market,” Fleming says. “Employers are reducing hiring, and employees are staying put. Layoffs and discharges increased in September but remain within pre-pandemic levels. If hiring continues to slow, unemployment could rise.”
So does this weak jobs report ensure the Fed will slash rates at its next meeting?
“According to the CME FedWatch tool, the probability of the Federal Reserve cutting rates in November by 25 basis points is currently 99.5 percent, which is up from 95 percent yesterday,” Fleming says. “Mortgage rates have largely priced in expected Fed rate cuts but may decline modestly from their recently elevated levels as 10-year Treasury yields have retreated modestly based on today’s news.
“Overall, it is unlikely that rates will fall significantly and sustainably below 6 percent this year, but a slowing labor market is good news for the Fed as it continues to navigate the economy to a soft landing,” Fleming adds.
Lawrence Yun, chief economist for the National Association of Realtors, notes that this jobs report was impacted by a unique circumstance: the recent hurricanes.
“However, the fact that job figures were revised lower in the prior two months, by a 112,000 in sum, clearly hints at a slowdown in the economy,” Yun says in a statement. “At the same time, the unemployment rate remains low at 4.1 percent. The tight labor market is pushing wage growth to 4%, now outpacing one-year consumer price inflation and home price rises.”
“The number of Americans out of the labor force and uncounted by statistics remains high at 101 million,” Yun says. “Many are retirees and students. However, the fact that five million quickly left the labor force when COVID-19 arrived, and the number hasn’t come down since then, is why there are so many ‘help wanted’ signs across America.”
Yun says the report ensures that the Federal Reserve “will make a rate cut at least one more time before the end of the year.”
“Several more cuts are also likely in 2025,” he adds. “That does not mean mortgage rates will fall in lockstep. The large issuance of Treasury bonds to fund the swelling budget deficit has prevented mortgage rates from falling deeper. The deficit problem is not just in the U.S. but worldwide. That is why the dollar can remain strong. However, the rise in gold prices reflects investors’ unease about government finances across the globe.”
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