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Hiring cooled significantly in October

AILSA CHANG, HOST:

A fall frost hit the job market last month. After a sizzling September, hiring cooled considerably in October. U.S. employers added 150,000 jobs during the month, and that is about half the pace of the month before. NPR's Scott Horsley joins us now with the details. Hey, Scott.

SCOTT HORSLEY, BYLINE: Hi, Ailsa.

CHANG: OK, so what's behind the slowdown?

HORSLEY: Well, part of it reflects the fallout from the autoworker strike, which has now been tentatively resolved. The manufacturing sector showed a loss of 35,000 jobs last month. Almost all those were auto jobs or parts suppliers. So presumably, next month's report will show all those folks back at work, assuming the tentative UAW contracts with Ford, Stellantis and General Motors are ratified. We also continue to see some fallout from the Hollywood actors' strike, which is now in its fourth month.

CHANG: Yeah.

HORSLEY: The movie business shed another 5,000 jobs in October, and it's down about 44,000 jobs since May, when the writers went on strike. Even if you set aside those labor disputes, though, the economy would have added about 190,000 jobs in October, which is a solid number, but it's a - still a significant slowdown from that blockbuster month in September.

CHANG: Interesting. Well, what's happening with unemployment these days?

HORSLEY: The unemployment rate inched up last month to 3.9%. That's still very low. It's been under 4% now for 21 months in a row, which is the longest streak like that in more than 50 years. There are signs, though, of a little more slack in the job market. Hours worked were down last month. Wages grew more slowly than in the previous months. Julia Pollak, who's chief economist at the job search website ZipRecruiter, notes that, over the last three months, wages have been rising at an annual rate of only about 3.2%. She says, as long as wage growth stays in that range, it should take some pressure off inflation, and that would be reassuring for the Federal Reserve.

JULIA POLLAK: So that's a very, very cool number there, and that should make the Fed feel quite confident and comfortable with its decision this week to pause rate hikes.

HORSLEY: A lot of investors believe the Fed is done raising interest rates altogether. Now, that has the stock market on a tear this week. The Dow Jones Industrial Average rose more than 200 points today, and it's up a whopping 5% for the week.

CHANG: Well, let me ask you this, Scott - is this October slowdown in job growth just a little chill, or is it more the beginning of, like, a deep freeze, so to speak?

HORSLEY: You know, it still looks like a pretty mild winter for the job market, but we'll see. The Fed is trying to pull off that elusive soft landing where we get inflation under control without a big spike in unemployment. Before the leaves started coming down this fall, the Fed had already raised interest rates to their highest level in more than two decades. Pollak says those higher borrowing costs are really what's driving this slowdown in hiring, and she says it could be reversed if need be.

POLLAK: Employers tell us that they have many vacancies that they want to fill. They want to expand. They want to open new locations. They're pausing right now because there's just too much uncertainty, and the cost of credit is just too high for those investments to pencil out. But if rates start moving down, I think you'll see a surge in business confidence and hiring again.

HORSLEY: For now, at least, the Fed is not even talking about cutting interest rates. There is one more Fed meeting in December, and we'll see then what policymakers think the next year has in store for us.

CHANG: That is NPR's Scott Horsley. Thank you, Scott.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.