A U.S. jobs sector that’s shown unprecedented resilience to the impacts of long-running high inflation may finally be showing some signs of cooling off, according to the latest data from the U.S. Labor Department.
Friday’s Employment Situation Summary from the Labor Department shows U.S. companies added 150,000 jobs in October, down significantly from the 297,000 new hires in September and the lowest monthly hiring figure since June.
Unemployment inched up to 3.9% last month from September’s 3.8% rate and is now the highest it’s been since January 2022, according to the report.
Wage growth also showed some signs of easing in October with average hourly earnings up 4.1% over the same time last year and down from September’s 4.3% annual growth rate.
The new data may provide fuel for Federal Reserve Chairman Jerome Powell and the monetary body’s board of governors to call a final halt to a series of interest rate increases going back to March 2022. At its meeting earlier this month, the Fed made no adjustments to its benchmark lending rate, which stands at 5.25-5.5%, the highest in over two decades.
Andrew Hunter, deputy chief U.S. economist at Capital Economics, told The Wall Street Journal that the latest labor report “is another sign that the economy’s strength in the third quarter is likely to unwind in the fourth.”
“With wage growth also continuing to slow, it is increasingly hard to imagine the Fed hiking interest rates any further,” Hunter said.
Health care added 58,000 jobs in October, government jobs grew by 51,000 and the construction industry added 23,000 positions, according to the Labor Department.
Industries that saw job declines in October included manufacturing, which lost 35,000 jobs, transportation and warehousing positions declined by 12,000 and information-related industry employment decreased by 9,000.
Some economists are predicting further easing of the U.S. labor market in the final quarter of 2023 but don’t believe a recession is on the near-term horizon.
“We’ll see a significant deceleration in growth in the fourth quarter, but not in a way that we’re plunging into any kind of recession,” Sean Snaith, director of the University of Central Florida’s Institute for Economic Forecasting, told Reuters.