Hiring slows with just 150,000 jobs added last month

Nov. 3:

The monthly employment report provided further evidence that the economy may be slowing down a bit. The nonfarm payroll grew by 150,000 in October, which was below expectations, and September job growth was revised downward to 297,000 from the 336,000 originally reported. Manufacturing employment dropped by 35,000 jobs, which was also a surprise, but was significantly affected by the United Auto Workers strike.

The unemployment rate ticked up from 3.8% to 3.9% in October, and the underemployment rate increased from 7.0% to 7.2%. Unemployment and underemployment rose in spite of a small drop in the labor force participation rate, from 62.8% to 62.7%.

Hourly earnings rose 0.2% for the month. Annual growth in hourly earnings dropped from 4.3% in September to 4.1% in October. The average workweek decreased slightly from 34.4 to 34.3 hours. A longer average workweek might have indicated a need to fill jobs.

Fed chair to speak at conference next week

Events of interest on next week’s calendar are Federal Reserve Chair Jerome Powell’s appearance at a conference on Thursday and $112 billion of Treasury note and bond auctions.

State of the market

The market is still assessing the impact of the employment report. As of this morning, the chance of another interest rate hike has virtually disappeared from the Fed funds futures market. The futures market also forecasts a rate cut by the June 12 Federal Open Market Committee meeting, and perhaps even earlier. However, that’s not an official forecast, it only reflects the pulse of the market as of this morning.

The Dow traded up this morning and Treasury yields were down relative to Thursday morning.

Economic calendar

Tuesday, Nov. 7

Trade Balance Report
Consumer Credit

Thursday, Nov. 9

Weekly Initial Jobless Claims
Powell participates in a panel on “Monetary Policy Challenges in a Global Economy” at the International Monetary Fund’s Jacques Polak Annual Research Conference in Washington, D.C.

Friday, Nov. 10