The U.S. economy added 150,000 jobs in October, extending a year-long softening trend that has gradually brought hiring to levels to reflect the pace of job growth before the pandemic.
Wage growth moderated slightly in October, rising by 4.1 percent over the previous 12 months to $34.00 an hour.
“This is still one of the best labor markets for workers that we’ve seen relative to the last 30 years,” said Justin Bloesch, a professor of economics at Cornell University. “But it is definitely less hot than it was last year.”
The wave of heightened strikes across the United States, which included 45,000 autoworkers on strike in October, also appeared in the October report, as manufacturing job growth slid by 35,000. However, in the long term, the autoworkers’ new contract is likely to push wages higher across affected industries.
Despite this cooling, the resilient job market is propelling the economy to unexpected highs. The U.S. economy grew at a brisk 4.9 percent annual rate in the most recent quarter, in large part because consumers have the means to keep spending. Wages are rising and inflation has eased in recent months. And fresh data this week shows that productivity is growing at the fastest pace in three years.
As a result, Americans are continuing to open their wallets. Spending on housing and transportation, as well as movie theaters, restaurants, and sporting events all rose in August, government data shows, helping support a range of new service jobs.
“If you have a full-employment labor market with the pressures of inflation easing, such that you generate real wage gains — in an economy that’s 70 percent consumer spending, that’s a powerful force with real momentum,” Jared Bernstein, chair of the U.S. Council of Economic Advisers, said in an interview this week.
That solid showing is in stark contrast to widely held recession fears at the start of the year. Many, including the Federal Reserve chair, had expressed concerns that the central bank’s aggressive push to bring down inflation would result in job losses across sectors and could tip the economy into a downturn. That hasn’t happened, at least not yet, even as inflation has eased — to 3.7 percent in September, from last summer’s high of 9.1 percent. This week, Fed Chair Jerome H. Powell announced that he would leave interest rates unchanged for the time being, while calling the job market’s resilience a “historically unusual and very welcome result.”
“The bigger picture, from our standpoint, is: We’ve got a very strong economy, strong labor market,” Powell said.
Indeed, recent data confirms that the labor market remains robust by many measures. The unemployment rate, which has risen gradually this year, remains near longtime lows. Job openings ticked up slightly to 9.6 million in September, according to the BLS’s job openings survey released Wednesday, meaning there are roughly 1.6 job openings for every unemployed worker. Layoffs fell to a nine-month low in September, data from the same report showed.
Bloesch, the economist at Cornell, said that uncertainty about the future could be pushing employers to hold onto workers rather than conduct layoffs. “Employers don’t know if things are going to boom or slow down,” he said. “So one of the best things to do in the face of uncertainty is hold on to the workers you have.”
Meanwhile, overall strong job creation has been drawing workers back into the labor market. The share of adults between the ages of 25 and 54 participating in the labor market — a metric closely watched by policymakers as a sign of labor market health — has risen to its highest level in two decades.
Leisure and hospitality, health care, and government have been driving recent job gains, as consumers have continued to refocus spending toward services and away from goods. The leisure and hospitality sector finally returned to its pre-pandemic level in September after months of lagging. Workers in these industries, which tend to offer lower wages, have seen historic levels of wage growth as eager-to-hire employers have spent more to attract workers.
The public sector, which has struggled since the pandemic to retain workers, is finally beginning to see a boost in job creation, as wages have begun to catch up with the private sector.
Edward Watson, 35, a utility technician for the city of Ontario, Calif., had been thinking about quitting his local government job for a higher-paying one. His wage increases of around 2 or 3 percent a year weren’t keeping up with the cost of living, making it difficult to support his wife and three children. Meanwhile, work had become more stressful as his co-workers retired and quit during the pandemic.
But this summer, Watson’s union secured a 27.5 percent raise for city workers over the next three years, giving Watson a reason to stay, and enticing some of his former co-workers back to work for the city. He received a 9.5 percent wage boost in July and is now making around $36 an hour.
“I’m able to put a little more into savings. It helps at the grocery store,” Watson said. “I think a lot of people have a lot more confidence now that they can stay in their jobs with the city.”
But there are also signs that employers in other industries are much less eager to hire. Industries that are more sensitive to the Fed’s interest rate hikes, such as manufacturing, construction, financial services, and the information sector, which includes tech, have seen minimal job gains in recent months.
BREAKING: The U.S. economy added 150K jobs in October, coming in below expectations. pic.twitter.com/C7sXRNdm2m
— Squawk Box (@SquawkCNBC) November 3, 2023
October's jobs report does not signal a recession in the US, according to The Conference Board chief economist Dana Peterson. @Nasdaq pic.twitter.com/rreWmnodwL
— Yahoo Finance (@YahooFinance) November 3, 2023