Economic Commentary

Economic Commentary

November 4, 2022

September job growth solid, likely not cooling enough for a Fed pivot

Executive summary

U.S. payrolls increased in October by 261,000, above the consensus of 200,000, along with upward revisions to the September figures. Yet, there were multiple markings of cooling conditions. The six-month average slipped to 347,300, the slowest six-month pace since the reopening period in 2020. The unemployment rate rose to 3.7%, erasing the September decline, coupled with a decrease in the labor force participation rate.

Meanwhile, average hourly earnings grew 4.7% from a year ago, the slowest year-over-year pace in 14 months, but well-above the pre-pandemic rate of 3.0%. The number of temporary workers also continued to climb.

Alas, the resilience of labor market conditions, which is good for individuals, keeps the Federal Reserve (Fed) on the hot seat. Inflationary pressures simply aren’t fading fast enough, especially with a solid labor market. Earlier this week the Fed delivered a fourth supersized three-quarter point (0.75%) rate hike. This report may keep another supersized rate hike on the table at the next Fed meeting on December 14, though there is plenty more inflation data coming between now and then. Lastly, investors may largely ignore this report since it doesn’t change the prospects of higher interest rates nor the likelihood of a recession. 

September labor data table   unemployment, payroll and earnings data for the prior six months. Payrolls: 6-month average fell to the slowest pace since the reopening period in 2020. Net upward revisions added 29K for August and September. Pre-pandemic 3-year average was 177K/mo. Unemployment rate: Rose month-over-month erasing the September decline. Labor force participation: Still 1.1percentage points below 2019 level. Average hourly earning year-over-year: Slipped to the slowest YoY pace in 14 months. Non-supervisory fell to 5.5% from a near-term high of 6.7% in March but remains well-above the pre-pandemic 10-year average of 2.4%. Average weekly hours worked: has held steady for five straight months, staying in-line with the pre-pandemic average. Manufacturing hours ticked up to 40.4 from 40.3.

A review of major industry trends

Private payrolls increased by 233,000 workers and government payrolls rose by 28,000. Service-providing industries added 200,000 positions, while goods producers hired 33,000.

Government swung to a gain of 28,000 from losses in the prior month. Moreover, government accounted for a large portion of the upward revision for September, going to -4,000 from the initially reported -25,000. Much of the upward revision was within education. Similarly, financial activities were revised upward for September, swinging to +1,000 from -8,000.

Otherwise, most of the industry trends have remained largely intact, albeit slower than their pace over the summer. That said, we remain pleasantly surprised by the lack of job losses with construction, especially given the massive freefall that residential housing has experienced.

To read the publication in its entirety, select "Download PDF," below.

The latest research & insights Related resources

    {0}
    {6}
    {7}
    {8}
    {9}
    {12}
    {10}
    {11}

    {3}

    {1}
    {2}
    {7}
    {8}
    {9}
    {10}
    {11}
    {14}
    {12}
    {13}