The Employment Situation For October 2023

Editor's Note: This report is based on survey data from September 2023 that was published in October 2023. This is the most recent data available. (Source: Bureau of Labor Statistics)

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The US unemployment rate average held steady at 3.8% for the second month in a row, and in what has become a very familiar tale over the last couple of years, US employers once again exceeded expectations, adding 336 thousand jobs to their payrolls last month. 

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What may be even more impressive in terms of quantifying the resilient strength that the economy has continued to display, however, is the fact that the previous two months had their initially released jobs gains revised upward by an average of about 45 thousand per month, so the job market has actually been even stronger than previously reported.

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Beyond the jobs figures, however, the other primary story conveyed through this latest economic report is one of stability, where there was very little month-to-month change in most of the aggregate data points and metrics that are collected and computed. 

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For example, there was no significant change in the number of people who are classified as long-term unemployed at 1.2 million, nor was there any meaningful movement in the labor force participation rate at 62.8%. 

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The leisure and hospitality industry saw the largest number of new jobs added with about 96 thousand new payroll entries over the month, which is a more than 50% overperformance relative to the average growth of 61 thousand jobs per month over the past year in this industry. 

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The government sector saw the next largest number of job additions at 73 thousand, followed by health care at 41 thousand, then professional services and social services which added about 29 thousand and 25 thousand new jobs last month, respectively. 

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The transportation and warehousing industry saw a small increase in their ranks, while the information industry saw a comparable decrease, but the remaining industries  - including mining, retail, wholesale, manufacturing, construction, and financial activities - saw no meaningful month-to-month change in employment figures.

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Average hourly earnings rose by about 0.2% or $0.07 per hour, while the average workweek length was unchanged at 34.4 hours. 

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Mployer Advisor’s Take

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In the face of the largest and fastest series of interest rate hikes that we’ve seen in the last 40 years, US employers are continuing to hire and are largely holding onto the talent and role players that they’ve already got.

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Further, while somewhat counterintuitive given the surprisingly strong jobs report today which makes the probability of another interest rate hike when the Fed reconvenes next month all the more likely, the markets seem to have responded positively to the news and saw significant gains over the course of the day.

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In many ways, it seems like the US economy keeps outdoing itself and proving its fortitude in a time when many economists once believed it would be softening if not in the midst of a full-on recession.

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Perhaps instead, both the unemployment rate and inflation have found a sustainable equilibrium that can be maintained throughout this current stage of the economic cycle and are strong enough to ensure that any economic downturn on the near-term horizon is both relatively mild and short-lived. 

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Only time will tell, as always of course, but for one other benchmark for good measure, it’s worth noting that as of last month restaurants and bars have finally returned to their pre-pandemic levels, which represents a significant milestone on COVIDs ongoing transition from epidemic to endemic.

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If the economy’s return to normalcy has reached a place of stability, this new normal on the employment front seems to be working pretty well so far. 

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