Little Change in Unemployment Rate
The monthly jobs report is typically based on data from the Bureau of Labor Statistics. As no update has yet been issued due to the federal government shutdown, this month’s insights are based on other relevant employment trends and forecasts.
Jobs Growth
The private sector added 42,000 new jobs in October, according to ADP. This was a solid improvement after two months of losses, including September results that showed 29,000 fewer jobs.
Top Industries
Also according to ADP, the biggest gains in October came from trade, transportation, and utilities and education and healthcare. For the third month in a row, losses were reported in three sectors: professional and business services, information, and leisure and hospitality.
Unemployment
The Federal Reserve Bank of Chicago estimates a negligible shift in the unemployment rate in October, from 4.35% to 4.36%.
Wages
In an analysis by Bank of America, year-over-year payroll growth held steady at approximately 0.5% in October, which matched the rate of growth reported in its September analysis. ADP estimates year-over-year pay growth for the month at 4.5% for job stayers and 6.7% for job changers.
Work Week
In the absence of any official government updates, little change is expected in weekly hours worked in October, which were estimated at 34.2. If sustained, this would mark the fifth consecutive month at that level.
Temporary Job Trends
Staffing Industry Analysts expects activity in the temporary sector to be mostly in line with the previous month, which is lower than the previous year.
What Does It All Mean?
In recent months, labor market growth has shown some worrisome signs of weakness. Forward momentum has definitely slowed, although the latest round of data indicates a gradual deceleration rather than a full stop. Growth is still positive, albeit somewhat anemic. Wages are holding steady but not accelerating, suggesting a greater balance between labor supply and demand. Layoffs appear to be increasing, and unemployment is rising but not in an alarming way.
News reports of planned layoffs are always headline makers, often painting a dire impact that is more perception than reality. The biggest news in this latest round of labor market data is a spike in layoffs to 153,074, the highest for the month in 22 years, as reported by outplacement firm Challenger, Gray & Christmas. How significant is this news? There could be a number of contributing factors: from corrective backpedaling to compensate for over hiring following the pandemic to the impact of AI to a slowdown in both corporate and consumer spending. Employers are certainly more cautious about pursuing multiple new growth initiatives and that translates to a wait-and-see approach to the future for some and retrenchment for others. Most economists, however, have expressed little concern over the spike.
For those who do find themselves unemployed, the reality is jarring, as it has become more challenging to secure a new position. For the first time in a long time, there are fewer job openings than job candidates, with roughly 7.2 million open roles for an estimated 7.4 million unemployed people. This imbalance is especially hard on newcomers to the workforce, who are finding fewer entry-level roles available.
The labor market outlook may be limited at present, but visibility will improve once these shifting conditions move into the rearview mirror, where they tend to get less significant with distance. For the present, it makes sense to focus on what can be easily seen and managed. Look at the corporate culture and the operational policies,
processes, and practices that define the workplace. Knowing that people are the true value drivers in any organization, take steps to ensure the best environment to
promote productivity, innovation, and job satisfaction for both the current and future workforce.
Sources: Staffing Industry Analysts, MarketWatch CNBC, CNN, Inc., CBS, Reuters, The Hill, ADP, Banks of America, The Federal Reserve Bank of Chicago, Challenger, Gray & Christmas
