Total nonfarm payroll growth increased by 150,000 in October, and the unemployment rate changed little, increasing 3.9% over last month’s 3.8%, according to the latest U.S. Bureau of Labor Statistics (BLS) report released Friday. The numbers fell short of economists’ expected gains following a robust September reading.
According to the report, job gains occurred in healthcare, government, social assistance and of importance to the housing industry, construction. Employment declined in manufacturing due to United Auto Workers’ strike activity, BLS reported.
The Fed meeting this week, where rates remained unchanged, followed by a cooling jobs report indicates that there will be a pivot from raising interest rates to lowering them next year, predicted National Association of REALTORS® Chief Economist Dr. Lawrence Yun.
“The Federal Reserve will be pivoting from raising interest rates to current neutral to eventually cutting interest rates next year,” Yun said. “The job market has slowed measurably. The latest monthly job gains of 150,000 in October are one of the weakest in the past three years. The unemployment rate rose to 3.9%, close to a two-year high. Wage gains also slowed to 4.1%, compared to nearly 6% last year, which will lower inflationary pressures.
“The bond market is reacting as if the Fed will be cutting rates in 2024. The key benchmark 10-year Treasury yield slid down to 4.55% and is below a recent high of 5%. That means mortgage rates will be coming down. The 30-year fixed-rate will stick in the 7% range for this year, but looks to move down into the 6% range by the spring of next year. Moreover, if the spread between Treasury and mortgage were to move from the current abnormal high to just the historical average, the mortgage rates today would already be in the 6.2% to 6.7% range. Be ready for more homebuyers and more homesellers.”
Breaking down the numbers
The October report stated:
Health care added 58,000 jobs in October, in line with the average monthly gain of 53,000 over the prior 12 months. Over the month, employment continued to trend up in ambulatory healthcare services (+32,000), hospitals (+18,000), and nursing and residential care facilities (+8,000).
Employment in government increased by 51,000 in October and has returned to its pre-pandemic February 2020 level. Monthly job growth in government had averaged 50,000 in the prior 12 months. In October, employment continued to trend up in local government (+38,000).
Social assistance added 19,000 jobs in October, compared with the average monthly gain of 23,000 over the prior 12 months. Over the month, employment continued to trend up in individual and family services (+14,000).
In October, construction employment continued to trend up (+23,000), about in line with the average monthly gain of 18,000 over the prior 12 months. Employment continued to trend up over the month in specialty trade contractors (+14,000) and construction of buildings (+6,000).
Employment in manufacturing decreased by 35,000 in October, reflecting a decline of 33,000 in motor vehicles and parts that was largely due to strike activity.
In October, employment in leisure and hospitality changed little (+19,000). The industry had added an average of 52,000 jobs per month over the prior 12 months.
More key highlights:
- Both the unemployment rate, at 3.9%, and the number of unemployed persons, at 6.5 million, changed little in October.
- Among the major worker groups, the unemployment rates for adult men (3.7%), adult women (3.3%), teenagers (13.2%), Whites (3.5%), Blacks (5.8%), Asians (3.1%) and Hispanics (4.8%) showed little change in October.
- Among the unemployed, the number of permanent job losers increased by 164,000 over the month to 1.6 million. The number of persons on temporary layoff changed little at 873,000.
- In October, the number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.3 million. The long-term unemployed accounted for 19.8% of all unemployed persons.
- Both the labor force participation rate, at 62.7%, and the employment-population ratio, at 60.2%, changed little in October.
- The number of persons employed part time for economic reasons, at 4.3 million, changed little in October. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.
- Over the month, employment showed little change in other major industries, including mining, quarrying, and oil and gas extraction; wholesale trade; retail trade; financial activities; and other services.
- In October, average hourly earnings for all employees on private nonfarm payrolls rose by 7 cents, or 0.2%, to $34.00. Over the past 12 months, average hourly earnings have increased by 4.1%. In October, average hourly earnings of private-sector production and nonsupervisory employees rose by 10 cents, or 0.3%, to $29.19.
To view the full report, click here.
