The Jobs Report – October 2023

Highlight

The economy added 150K jobs in October; this was below the consensus of 180K and well below last month’s revised gain of 297K. Indicating employment may be softer than previously believed, both September and August were revised down by a combined total of 101K. August was revised down by 62K after being revised up by 40K in September. Last month, we had positive revisions for the first time this year, and that has reversed this month. Private payrolls added 99K jobs, down sharply from last month’s revised gain of 246K.   

What You Should To Know:

• The household survey reported a job loss of 348K pushing the unemployment rate up to 3.9% from 3.8%. The labor force shrank by 201K which helped limit the rise in the unemployment rate. The underemployment rate, the broadest measure of unemployment, rose to 7.2% from 7.0%.
• The leading indicators in the report were mixed.  Temporary workers increased by 6K, while overtime hours decreased by 0.1%. The index of hours worked dropped by 0.3% in October while YOY hourly earnings increased 4.1%, down from a revised growth rate last month of 4.3%. The index of hours worked is a negative for Q4 GDP.  
• In October, job gains were concentrated in few industries. Services added 110k, down from last month’s gain of 218K. The most significant job increases were in private education and health care services, adding 89K of jobs. Government added 51K, the exact same amount added in August and September. The goods producing sector lost 11K, consistent with the weak ISM reports.  
• In total this was a weak jobs report as job gains slowed, while workers had fewer hours on the job and overtime was reduced. The report is a sharp reversal of the positive trend from last month’s report. Yesterday, the Fed did not hike interest rates but left the prospect of a December hike on the table. This report will not further the cause of rate hikes. The weakening trend in job growth across the economy and rising unemployment will likely keep the Fed from hiking further.