JOB REPORT: U.S. Economy Adds 128,000 Jobs In October, Unemployment Rate Rises To 3.6%
The U.S. economy added more jobs than expected in October, topping estimates even as a protracted strike was anticipated to weigh on hiring growth.
The unemployment rate held near a 50-year low and wage increases picked up slightly.
The Bureau of Labor Statistics released its latest print on the U.S. employment situation on Friday at 8:30 a.m. ET. Here were the main metrics from the report, compared to consensus economist expectations compiled by Bloomberg:
- Change in non-farm payrolls: +128,000 vs. +85,000 expected and 180,000 in September
- Change in manufacturing payrolls: -36,000 vs. -55,000 expected and -5,000 in September
- Unemployment rate: 3.6% vs. 3.6% expected and +3.5% in September
- Average hourly earnings month-on-month: +0.2% vs. +0.3% expected and 0.0% in September
- Average hourly earnings year-on-year: +3.0% vs. +3.0% expected and 3.0% in September
The October jobs report reflected the impact of a 40-day United Auto Workers (UAW) strike against General Motors (GM), which lasted from September 16 through October 26. This extended over the survey weeks for both the BLS establishment and household surveys, which captured the calendar and pay period week, respectively, that included the 12th day of the month.
Forty-six thousand workers were counted as part of the strike, according to the BLS strike report last Friday.
However, the results of the strike had less of a dampening effect than expected on the BLS establishment survey, which includes metrics including the change in non-farm payrolls.
Consensus economists anticipated, on the net, a loss of 55,000 manufacturing payrolls, steepening sharply from a revised loss of 5,000 in September.
“Manufacturing employment decreased by 36,000 in October,” the BLS said in its October report. “Within manufacturing, employment in motor vehicles and parts declined by 42,000, reflecting strike activity.”
Most economists anticipated private employment gains would have totaled more than 100,000 if not for the strike. The ADP/Moody’s jobs report Wednesday showed private payrolls rose by 125,000 in October, or 15,000 better-than-expected. Due to differences in methodology from the BLS establishment survey, the ADP report typically does not capture the impact of striking workers.
However, notwithstanding the impact of the GM strike, job gains have been trending lower in recent months. This phenomenon had been captured in economic reports ahead of Labor Department’s “official” jobs report Friday.
IHS Markit said in it’s flash purchasing managers’ index report last week that employment numbers fell at the steepest rate since December 2009 in October, due in part to “more cautious hiring strategies,” the institution said. Challenger Gray on Thursday said job cuts increased between September and October, albeit with the total coming in lower than the number of job cuts in October last year.
The Department of Labor’s weekly initial jobless claims have come in mostly higher-than-expected over the past four weeks but still held below 220,000 and at a low level relative to recent years. ISM’s September manufacturing and non-manufacturing surveys each posted decreases in their employment indices.
The recent sluggishness in new payroll growth could well be symptomatic of a labor market closing in on capacity, especially with the unemployment rate near multi-decade lows.
In the Federal Reserve’s October Beige Book or collection of anecdotes across Fed regions, the central bank characterized recent employment trends as rising “slightly amid reports of persistent labor shortages.”
“Labor market tightness across skill levels and occupations was widely cited as a factor restraining hiring,” the Fed said in its report.
Still, the Fed’s latest monetary policy statement released Wednesday continued to characterize the overall labor market as “strong.”
