October jobs report signals cooling labor market

New data from the Bureau of Labor Statistics revealed 150,000 jobs were added in October, while gains in September and August were revised down 39,000 and 62,000, respectively. NAFCU Chief Economist and Vice President of Research Curt Long provided insights in a new Macro Data Flash report.

“The October employment report sends a clear signal that the labor market is cooling,” said Long. “Job growth slipped to its second-slowest pace of the year, and there were significant downward revisions to August and September. Meanwhile, the unemployment rate climbed to its highest level in nearly two years at 3.9 percent. That remains low by historical standards but the unemployment rate is on an unmistakably upward trajectory, having risen 0.5 percentage points in the past six months. Historically, similar rises in unemployment have presaged recessions.”

The unemployment rate rose to 3.9 percent in October, and the labor force participation rate fell to 62.7 percent. Year-over-year wage growth fell to 4.1 percent, which is the lowest level since June 2021.

“Next month’s figures should benefit from the return of striking UAW workers, but this report does serve as a wake up call for policymakers. Interest rates plunged on the release of this report, which illustrates the conundrum the Fed faces: figuring out how much help the market may provide on its own via loosening financial conditions if the economy continues to weaken. Nevertheless, NAFCU continues to believe that Fed hikes are finished during this cycle, and a couple more reports like this one will have the FOMC considering a rate cut as early as March,” Long concluded.


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