October’s slowdown in U.S. job growth was probably caused in part by United Auto Workers (UAW) strikes against Detroit’s “Big Three” automakers, which reduced payrolls in the manufacturing sector.
The expected slowdown in job creation last month would also be a payback following September’s huge increases—the highest in eight months.
The labour market conditions are predicted to gradually improve in the Labor Department’s much anticipated employment report on Friday, with the smallest annual pay rise in almost two and a half years and a notable increase in the labour supply.
The analysis may support the idea that there is no need for more rate increases by the Federal Reserve. In an indication of the resiliency of the economy, the U.S. central bank kept interest rates constant on Wednesday while indicating that a future increase was possible.
Senior economist Sam Bullard of Wells Fargo in Charlotte, North Carolina, said that “the hiring figures will ultimately be somewhat depressed by strike activity, though the labour market is still likely to remain quite tight.”
According to a Reuters survey of experts, the Bureau of Labor Statistics (BLS) of the Labor Department is expected to report that nonfarm payrolls climbed by 180,000 jobs last month after surging 336,000 in September. Payrolls in manufacturing are expected to decline by 10,000 following a 17,000 increase in September.
At least 30,000 UAW members went on strike at the time the BLS polled firms for October’s employment report, according to information released last week. Now that the strikes have finished, November’s payrolls may benefit.
As state and local agencies hired for the upcoming school year, government employment—which was a major factor in payroll gains in September—probably tapered off last month. The payrolls count may be impacted by technical issues with the algorithm that is used to remove seasonal changes from the data.
“October payrolls show a significant seasonal adjustment downward, approximately 900,000,” stated Veronica Clark, an analyst at Citigroup in New York. “If the usual increase in employment, which usually happens ahead of the holiday season, is not as large as normal, this would imply weakness in seasonally adjusted figures.” Anecdotes from a number of businesses indicate that hiring around the holidays should continue to be active this year.”
The main factor driving the third-quarter GDP growth of the United States to almost 5% was the labour market.
At 3.8%, the unemployment rate is said to be stable. However, even with more people joining the workforce, the unemployment rate may still rise slightly because of concerns about a potential slowdown in the economy in 2019 as well as their trust in the availability of jobs.
