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Jobs Report: U.S. Added 128,000 to Payrolls Despite G.M. Strike Job Market Shows Resilience, Quieting Recession Fears
(about 7 hours later)
■ 128,000 jobs were added last month, the Labor Department reported on Friday. Analysts surveyed by Bloomberg had expected a gain of about 85,000. The American jobs engine has been beaten and battered, but it just keeps chugging along.
■ The unemployment rate was 3.6 percent, up from 3.5 percent the month before. Employers added 128,000 jobs in October, the Labor Department said Friday, and revisions to prior months’ data tacked on another 95,000. The figures for October would have been stronger had it not been for the strike at General Motors, which shaved close to 50,000 workers from the employment rolls, and for the layoff of some 20,000 temporary census workers.
■ Average hourly earnings rose 3 percent from a year earlier. The unemployment rate ticked up to 3.6 percent, still near a half-century low. Stocks rose Friday after the report reassured investors about the health of the economy, with the S&P 500 reaching a record high.
■ Estimates of job growth in August and September were revised upward by a combined 95,000 jobs. All told, the report and other recent data paint a picture of a job market that is weathering the storm of trade tensions and a cooling global economy. The manufacturing sector is in a slump, business investment is falling, and overall economic growth has slowed this year. But consumers are still spending, employers are still hiring, and fears of an imminent recession, which reached a fever pitch over the summer, have quieted for now.
A major auto strike and a slowing manufacturing sector weren’t enough to knock the American job market off course last month.
Employers added 128,000 jobs in October, the Labor Department said Friday, and revisions to prior months’ data tacked on another 95,000 jobs. October’s figure would have been stronger had it not been for the strike at General Motors, which shaved close to 50,000 workers from the employment rolls, and for the layoff of some 20,000 temporary census workers.
All told, the report painted a picture of a job market that is weathering the storm of trade tensions and cooling global growth, largely because of a resilient, consumer-driven domestic economy.
“As long as confidence remains pretty elevated, as long as job gains continue albeit at a slower pace, and as long as those job gains continue to deliver wage growth, consumption should continue to drive the economy,” said Ben Herzon, an economist for Macroeconomic Advisers by IHS Markit, a forecasting firm.
The economy still faces challenges. Job growth in manufacturing was weak even accounting for the G.M. strike, and separate data from the Institute for Supply Management showed that the sector contracted in October for the second straight month. Overall economic growth has slowed this year, as businesses have pulled back on investment.
But Friday’s report, combined with other recent data, suggests that fears of an imminent recession, which mounted over the summer, were overblown.
“It helps reduce the concern that the slowdown was becoming more broad-based and recession risks were right around the corner,” said Michael Gapen, chief United States economist for Barclays. “I think most people have a slightly more positive view of the U.S. economy now than even two or three weeks ago.”“It helps reduce the concern that the slowdown was becoming more broad-based and recession risks were right around the corner,” said Michael Gapen, chief United States economist for Barclays. “I think most people have a slightly more positive view of the U.S. economy now than even two or three weeks ago.”
The labor market has been a bastion of consistency throughout the economic expansion, steadily adding jobs despite natural disasters, government shutdowns and political turmoil. The United States has now experienced 109 straight months of job gains, more than double the previous record. The report was good news for President Trump, who has made the strength of the economy a selling point in his bid for re-election. He hailed the “blowout JOBS number” in a Twitter post on Friday. October was the 109th consecutive month of job growth, more than double the previous record.
The jobs engine has lost some momentum. Job growth has averaged 176,000 jobs per month over the past three months, down from 222,000 over the same period a year ago, a slowdown only partly explained by the G.M. and census effects. The strong job market is creating opportunities for workers who were left out of earlier stages of the recovery. The unemployment rate for African-Americans hit 5.4 percent in October, a record low, and the labor force participation rate, which measures the share of the population working or actively looking for work, hit a six-year high. Desperate to fill jobs, companies are recruiting stay-at-home parents, retirees and people with disabilities and criminal records.
Hiring last year got a push from the 2017 tax cuts, so some slowdown was to be expected as the effects of the cuts wore off. The question is whether hiring stabilizes at a somewhat lower level or continues to fall. Friday’s report, though only a single data point, suggests stabilization is more likely. “One of the beauties of the tight labor market is that people who once wouldn’t have been considered get a second chance at jobs,” said Diane Swonk, chief economist for the accounting firm Grant Thornton.
“It’s still respectable,” said Julia Pollak, a labor economist for ZipRecruiter, an online job marketplace. “Slow and steady is not necessarily bad.”
[Even with the low unemployment rate, many Americans are having trouble finding work after losing it. | Times readers shared their stories of struggling to find work.][Even with the low unemployment rate, many Americans are having trouble finding work after losing it. | Times readers shared their stories of struggling to find work.]
A sharper slowdown in hiring would be bad news for President Trump, who has made the strong economy a central selling point in his bid for re-election. And it could also raise concern at the Federal Reserve. Policymakers at the bank cut interest rates on Wednesday in a bid to shore up the economy, but signaled that they would probably pause to assess fresh data before cutting again. Until a few weeks ago, Joann Fields was cobbling together a living delivering meals for DoorDash. But last month, Ms. Fields, 50, finished a driver-training course at Austin Area Community College in Texas, and immediately got a job driving a truck for Swift Transportation — her first regular job in three years.
Consumers have been the main pillar holding up the economy. So far, they’re doing fine — consumer spending was strong in the third quarter, helping to offset weakness elsewhere. “I’m excited, I’m really excited,” Ms. Fields said. “I’m ready for the road.”
Those same patterns are playing out in the job market. Job growth in manufacturing, which experienced a mini-surge early in Mr. Trump’s term, has slowed recently, as has hiring in the oil patch. The trucking industry has been working to recruit more women in a bid to broaden its hiring pool. Companies in other industries are making similar decisions.
But the service sector has remained strong. Hotels and restaurants added more than 50,000 jobs in October, and even the struggling retail sector posted a second straight month of gains after months of steady losses. And revisions to earlier data erased hints that the slowdown was spreading. Right at Home, a provider of in-home elder care services, is struggling to keep up with surging demand as the population ages and more people need care. So it is casting a wider net, aiming its recruiting efforts at retirees, nursing students and immigrants. And it is stepping up retention efforts by offering more predictable schedules and opportunities for professional development.
“We could accept data that shows weakness in manufacturing,” said Michelle Meyer, head of United States economics for Bank of America Merrill Lynch. “Where it becomes a lot more problematic is if that weakness is spreading. We were starting to see indications of that the last few months, but they’ve now been revised away. It’s painting a brighter picture of the service sector of the economy.” Michael Flair, a vice president at the company, pointed to a recent study that found that annual employee turnover in the industry recently hit 82 percent, up 15 percentage points from a year earlier. He said he often lost workers to e-commerce warehouses, fast-food restaurants and other industries that offer more than the $12-an-hour wage that is typical in the home health industry.
That divergence — between confident consumers and wary businesses — cannot continue forever. Eventually, either businesses will start to cut jobs, a surefire way to erode consumers’ confidence, or free-spending shoppers will set executives’ minds at ease and encourage them to ramp up production again. “A lot of people say, ‘Just pay more money,’” Mr. Flair said. “But you can pretty quickly price yourself out of business and make that care that is already not cheap more of a burden for that family that is struggling to pay for their parent’s cost.”
“At some point in time, either the business sector has to come back or the consumer will falter,” said Diane Swonk, chief economist for the accounting firm Grant Thornton. Becky Frankiewicz, president of Manpower Group, the staffing firm, said she often heard stories like Mr. Flair’s. Companies are willing to eliminate degree and certification requirements, improve perks and benefits and even offer cash bonuses. But they are reluctant to raise base pay.
Even as economists worry about signs of a hiring slowdown, many employers are focused on a different challenge: how to find workers at a time when the unemployment rate remains near a half-century low.
“The number-one concern, for sure, continues to be finding and retaining talent,” said Becky Frankiewicz, president of Manpower Group, the staffing firm.
To fill jobs, companies are eliminating degree and certification requirements, improving perks and benefits, and recruiting stay-at-home parents, retirees and people with disabilities and criminal records. Those efforts are having an impact: The labor force participation rate, which measures the share of the population working or actively looking for work, hit a six-year high in October.
But one thing employers remain reluctant to do, Ms. Frankiewicz said, is raise pay.
“It continues to perplex me,” she said. “The defining challenge for economic growth is going to be bringing people in from the sidelines, and I absolutely believe that’s going to require wage acceleration.”“It continues to perplex me,” she said. “The defining challenge for economic growth is going to be bringing people in from the sidelines, and I absolutely believe that’s going to require wage acceleration.”
Hourly wage growth has been anemic for much of the recovery, and has stalled again recently. Average earnings growth picked up slightly in October, and was also revised upward for September, but growth has slowed over the past year. Wage growth has been anemic for much of the recovery, and has stalled again recently. Average hourly earnings were up 3 percent in October from a year earlier, down from a peak of 3.4 percent earlier this year. Wage growth for nonsupervisors has held up better, but is also not seeing the acceleration that would suggest a red-hot job market.
Weak wage growth is a challenge not just for workers but also for the broader economy. The length of the average workweek has also fallen slightly, particularly in manufacturing. Without more pay and more hours, it will be hard for consumers to keep spending more money. The overall pace of job growth has slowed this year, although the revisions for August and September mean the slowdown was milder than it previously appeared. Employers have added an average of 176,000 jobs per month over the past three months, down from 222,000 over the same period a year ago, a slowdown only partly explained by the G.M. and census effects.
In October 2009, the unemployment rate hit 10 percent, the worst mark of the worst recession since the Great Depression. A decade later, the unemployment rate is hovering close to a 50-year low. There is no doubt that the economy has improved substantially during what is now the longest expansion in American history. In his Twitter post celebrating the report, Mr. Trump said the economy had added 303,000 jobs, a figure much bigger than the official Labor Department total of 128,000. The Council of Economic Advisers broke down that figure in a blog post later in the day, explaining that it accounted for the revisions (95,000 jobs), the laid-off census workers (20,000 jobs) and the effect of the G.M. strike, which it estimated at 60,000 — larger than most independent estimates.
But by many measures, the labor market is still not as strong as at the peak of past economic cycles. A smaller share of working-age adults — particularly men — have full-time jobs, and wage growth has been slow. For policymakers at the Federal Reserve, the jobs report could be a sign that their bid to shore up the economy and prevent a recession was working. The Fed cut interest rates on Wednesday for the third time this year, but the bank signaled it would probably pause to assess fresh data before cutting again.
“The question is always, ‘compared to what?’” said Oren Cass, a senior fellow at the Manhattan Institute, a right-leaning think tank. “We should certainly celebrate that the unemployment rate is low and that the expansion has gone on as long as it has.” At the same time, he said, “if you ask how does this look relative to 2006-2007 or 1999-2000, it just doesn’t look as good on almost any metric.” Still, Mr. Trump’s trade war is taking a toll on manufacturing and other sectors that are exposed to the global economy. Job growth in manufacturing was weak even accounting for the G.M. strike, and separate data from the Institute for Supply Management showed that the sector contracted in October for the second straight month.
Mr. Cass said the relative weakness was partly the result of long-term structural changes in the American economy. But it also suggests that there is room for further improvement if the expansion can continue. Jerome H. Powell, the Fed chair, has said that one reason policymakers are cutting interest rates is that the recovery is only now reaching people with criminal records, people with less education, or others who often face barriers to employment. MSC Industrial Supply, a distributor of metalworking products, has seen demand slow this year, and last week said it expected sales in the current quarter to fall outright. In a conference call with investors last week, Erik Gershwind, the company’s president and chief executive, attributed the decline to the “overhang of uncertainty due to tariffs” and a cooling global economy.
“The weakness in industrial demand is broad-based, with some acute pockets of softness in areas like automotive, heavy truck, oil and gas and agriculture,” Mr. Gershwind said.
In response, the company has cut more than 100 jobs, and says it expects to reduce employment further this quarter.
Economists worry that as companies like MSC cut jobs, consumers could grow wary, allowing the weakness in the industrial economy to spill over into the much larger service sector. So far, however, that has not happened. Consumer spending was strong in the third quarter, and measures of consumer confidence, though down from a year ago, remained high.
Hotels and restaurants added more than 50,000 jobs in October, and even the struggling retail sector posted a second straight month of gains after months of steady losses. And revisions to earlier data erased hints that the slowdown was spreading.
“We could accept data that shows weakness in manufacturing,” said Michelle Meyer, head of United States economics for Bank of America Merrill Lynch. “Where it becomes a lot more problematic is if that weakness is spreading. We were starting to see indications of that the last few months, but they’ve now been revised away. It’s painting a brighter picture of the service sector of the economy.”
That divergence — between confident consumers and wary businesses — cannot continue forever. Eventually, either businesses will start to cut jobs, a sure way to erode consumers’ confidence, or free-spending shoppers will set executives’ minds at ease and encourage them to ramp up production again.
So far, consumers appear to be prevailing.
“As long as confidence remains pretty elevated, as long as job gains continue albeit at a slower pace,” said Ben Herzon, an economist for Macroeconomic Advisers by IHS Markit, a forecasting firm. “And as long as those job gains continue to deliver wage growth, consumption should continue to drive the economy.”