WASHINGTON (Reuters) – U.S. job growth slowed more than expected in October in part as strikes by the United Auto Workers (UAW) union against Detroit’s “Big Three” car makers depressed manufacturing payrolls, while wage inflation cooled, pointing to an easing in labor market conditions.
Nonfarm payrolls increased by 150,000 jobs last month, the Labor Department’s Bureau of Labor Statistics (BLS) said in its closely watched employment report on Friday. Data for September was revised lower to show 297,000 jobs created instead of 336,000 as previously reported.
Economists polled by Reuters had forecast payrolls rising 180,000. The economy needs to create roughly 100,000 jobs per month to keep up with growth in the working-age population.
Manufacturing employment dropped 35,000 after increasing 14,000 in September. The BLS reported last week that there were at least 30,000 UAW members on strike during the period it surveyed business establishments for October’s employment report.
The strikes have since ended, which could provide a lift to November’s payrolls. Average hourly earnings rose 0.2% after climbing 0.3% in September. In the 12 months through October, wages increased 4.1% after rising 4.3% in September. The unemployment rate rose to 3.9% from 3.8%.
The report could strengthen financial market expectations that the Federal Reserve is done raising interest rates for the current cycle. The U.S. central bank held rates unchanged on Wednesday but left the door open to a further increase in borrowing costs in a nod to the economy’s resilience.
The labor market is the major force behind the economy’s staying power, with gross domestic product recording an annualized growth pace of nearly 5% in the third quarter.
Though wage pressures are easing because of the expanding labor pool and fewer people changing jobs, the annual growth in average hourly earnings remains above the 3.5% that economists say is consistent with the Fed’s 2% target.
Wages have not been the main driver of inflation, but some economists worry that recent hefty contracts, including the ones scored by the UAW, airline pilots and the union representing UPS workers, could complicate the Fed’s fight against inflation.
They argued that the recent surge in worker productivity would not be enough to offset the higher compensation as the economy was now predominantly services.
But others disagreed, saying that the record-setting contracts would only become an issue for wage inflation if the Fed raised rates too high and choked off demand. They viewed the UAW contract as getting wages in the auto sector more aligned with the surge productivity during the COVID-19 pandemic.
Source: Economy - investing.com
