US non-farm payrolls fall below expectations in October

Closely watched US labor report showed less than expected jobs created in October, cooling wage growth and higher unemployment, signaling an easing in US labor market conditions.

Non-farm payrolls increased by 150,000 in October, the lowest since December 2020, vs downwardly revised September’s figure at 297,000 and missed expectations for increase by 180,000.

The biggest contribution to weaker than expected October’s NFP numbers comes from significant drop in manufacturing employment, sparked by strike of auto workers, though economists expect negative impact to be short-lived, as the strike is over.

Unemployment rose to 3.9% in October, the highest since January 2022, from 3.8% in September, adding to signals that the labor market is losing momentum.

Average earnings rose 0.2% compared to 0.3% forecast / September’s figure, though annualized figure increase by 4.1% in October vs 4.0% consensus and remaining above 3.5% which economists see consistent with Fed’s 2% inflation target.

Weaker than expected labor report in October adds to expectations that the Federal Reserve’s policy tightening cycle is likely close to its end.

The US central bank left interest rates unchanged in its meeting earlier this week, but keeps the door open for possible further hikes, as inflation remains elevated, though the future action will be dependent on condition of the economy, already dented by high borrowing cost.