The U.S. Labor Department revealed on Friday that employers have eased their pace of hiring, resulting in a slight uptick in the unemployment rate for October.
After months of robust growth during the summer, the formerly buoyant U.S. labor market showed signs of cooling. Federal Reserve officials, who have expressed concerns about sustained robust growth potentially hindering their efforts to further reduce inflation, may find some solace in these new figures.
“Today's jobs report confirms the nation's economy is still resilient despite rapid and appreciable tightening of financial conditions. Going forward, moderation of job gains is expected though the imbalance between labor supply and demand suggests wage growth will take more time to loosen up," CoreLogic Deputy Economist Selma Hepp said. "Overall, employers are less selective on the qualification requirements for positions and remote work continues to be used to attract talent from a national pool. There is no obvious reason for this trend not to continue.”
In October, 150,000 jobs were added to the economy, marking a significant decrease from the revised 297,000 in September. The unemployment rate also saw a shift, inching up to 3.9% from 3.8% in the previous month. This keeps the rate under 4% for a continuous stretch of 21 months.
Alongside the change in the unemployment rate was a dip in adult labor force participation. The percentage of adults engaged in work also receded by 0.2 percentage points, indicating potential concerns regarding the labor supply. Among the unemployed, the number of permanent job losers increased by 164,000 over the month to 1.6 million.
Also, the number of persons employed part-time for economic reasons, at 4.3 million, changed little in October. These individuals, who would have preferred full-time employment, were working part-time because their hours had been reduced or they were unable to find full-time jobs.
A bright spot was the construction industry where employed continued to trend up by 23,000, in line with the average monthly gain of 18,000 over the prior 12 months.
"The continuing strength of the construction labor market may be surprising, but it’s reflective of broader housing market dynamics today. Builders are benefitting from a lack of re-sale inventory as existing-homeowners remain rate-locked in," First American Economist Ksenia Potapov said. “As mortgage rates remain high and re-sale inventory low, a new home provides a good alternative to potential home buyers. And you need more hammers at work to build more homes.”
Mortgage Bankers Association Deputy Economist Joel Kan also weighed in on the construction numbers and what it means for the industry.
"Low levels of pre-owned housing inventory have pushed prospective buyers to new homes, increasing the need for workers, while owners staying in their current homes continue to invest in home improvement projects and repairs. A strong job market is nevertheless supportive of the housing market, both in terms of home buying and mortgage performance," Kan said.
Meanwhile, the government also made downward adjustments to job growth numbers for August and September. The revisions show 101,000 fewer jobs were added during these months than was previously estimated.
Average hourly earnings experienced a 0.2% increase in October and have grown by 4.1% over the last year, which suggests a deceleration in wage growth. The healthcare sector led the charge in job additions, contributing 77,000 jobs in October.
A noteworthy factor affecting the job growth numbers was the recent autoworkers strike, which has since been resolved. This strike led to a decline of 33,000 jobs specifically in the manufacturing of motor vehicles and parts.
