Emmanuel OchayiThe United States added fewer jobs than anticipated in October, causing the unemployment rate to tick up. According to the Bureau of Labor Statistics, 150,000 jobs were created last month, falling short of the 180,000 predicted by economists. The unemployment rate edged up from 3.8% to 3.9%.
This slowdown in job growth is a contrast to September’s figure when the economy added 297,000 jobs, albeit revised down from 336,000. Despite the disappointment, US stock markets rallied on this news, interpreting it as a possible sign that the Federal Reserve might reconsider its aggressive interest-rate hike strategy, which has aimed to combat inflation.
Over the past year, the Federal Reserve has raised interest rates to a 22-year high, hoping to cool the economy and rein in inflation. Fed Chair Jerome Powell expressed his desire for a “soft landing” that would reduce inflation without causing significant layoffs.
October’s report does provide some hope for this “soft landing.” The unemployment rate remains close to a 50-year low, staying at or below 4% for nearly two years. Economists had anticipated a slowdown in job creation given the current economic climate.
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This news comes at a time when both the Federal Reserve and the Bank of England have opted to keep interest rates unchanged, as inflation eases and the global economy faces a slowdown.
Inflation in the US currently stands at 3.7%, down from 9.1% in June 2022, but the Federal Reserve remains committed to bringing it down to its target rate of 2%. Powell suggested that there is still a long way to go in achieving this goal, leaving room for further rate hikes.
The US Labor Department also revised job growth figures for August and September, revealing that job gains were a combined 101,000 lower than initially reported.
The US job market in October was affected by a series of strikes. Manufacturing employment fell by 35,000 jobs as members of the United Auto Workers (UAW) union took industrial action against major car manufacturers, including Ford, General Motors, and Stellantis. However, these strikes were resolved at the end of last month, and workers have since returned to their jobs.
October also witnessed declines in transportation, warehousing, information, and finance sectors, which were unaffected by strikes.
Earlier in the week, ADP, the largest payroll supplier in the US, reported that private employers added 113,000 workers in October, falling short of expectations. Wages also showed signs of stagnation, with a 5.7% annual increase, marking the smallest gain since October 2021.
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