The U.S. economy added 12,000 jobs in October, according to the Bureau of Labor Statistics (BLS) survey of employers.  The increase was below consensus expectations for a gain of 100,000. The prior two months were revised down by a cumulative 112,000.  Employment “continued to trend up in health care and government. Temporary help services lost jobs. Employment declined in manufacturing due to strike activity”, according to BLS. BLS also stated that hurricanes likely had a negative impact in some industries, but did not quantify the magnitude.  The overall trend in job creation has slowed. Monthly gains averaged 373,000 in 2022; 255,000 in 2023; and 170,000 so far this year.

The BLS’s survey of households reported the unemployment rate at 4.1% in October, unchanged from  the prior month. BLS stated that - because of a different survey methodology - the unemployment rate was not impacted by hurricanes. Average hourly earnings – a proxy for wage growth – rose 0.4% for the month and 4.0% vs. a year ago. Both figures were slightly above consensus estimates.

Bottom line:  This report is clouded by the distorting impact of weather and worker strikes.  Downward revisions to prior months, as well as a fall in the labor participation rate, hint at a softening in the labor market. Bond yields plunged in the immediate aftermath of the report. Fed fund futures raised the likelihood of a 25 basis point rate cut at next week’s FOMC meeting to 98%, and upped the odds of another cut at the December meeting to 82% (as of 9 am ET).  

Source: Bloomberg, US Bureau of Labor Statistics.

Dave Donabedian, CFA, is chief investment officer of CIBC Private Wealth, serving in that capacity since 2009. His responsibilities include chairing the Asset Allocation Committee, as well as providing oversight of internal investment strategies and the external manager selection platform.​