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Drop In Unemployment Rate Masks Weak Labor Market

Job gains in just two industries and returning strikers masked weak or no job growth in most  industries, but the unemployment rate fell to 3.7%, down from 3.9% in October.

A surge of white men into the labor force (+493,000) in the more volatile household survey drove the drop in the unemployment rate. Since April, the unemployment rate has trended up.

Employers added 199,000 payroll jobs in October, mostly in health care (+76,800) and state and local government (+49,000), and returning strikers in auto manufacturing and motion pictures added another 57,000 jobs.

Most other industries had little or no change and retail trade had a seasonally adjusted drop of 38,400 jobs.

Annual wage growth cooled to 4.0%, down from the 4.1% to 4.4% range it has been in since March 2023.

Labor market slowing. Separately, the BLS also reported the rate of hiring and job opening rate have both slowed significantly in 2023, and the quit rate has dropped as well – all signs of a slowing labor market.

Further slowing ahead? With many economists predicting economic growth to slow in the first half of 2024 and the hiring trend falling in most industries, payroll job growth is likely to remain relatively weak outside of a few industries.

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Authors: D. Mark Wilson

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