October US job growth slows at lesser rate than expected
Job losses in manufacturing sector offset by gains elsewhere
US job growth has slowed at a lesser rate than predicted in October, with losses in the manufacturing sector offset by gains in other sectors.
The US Labor Department has published its monthly employment report in the wake of data showing a slowdown in the American economy in the third quarter of 2019. Nonfarm payrolls increased by 128,000 jobs, stronger than the expected 89,000.
The manufacturing sector lost 36,000 positions, compared with 5,000 in the previous month. A strike by around 46,000 workers at General Motors car plants in Kentucky and Michigan ended last week. Striking workers who were not paid during the payrolls survey period are termed as unemployed.
Payrolls in other sectors such as leisure and hospitality have offset the impact of this drop. Construction employment added 10,000 jobs.
Previous figures for job growth for August and September have been corrected, with the Labor Department finding 95,000 more jobs created than previously estimated.
Nonetheless, job growth overall has slowed this year, dropping from a 2018 average monthly gain of 223,000 in 2018 to an average gain of 167,000 per month in 2019.
The Federal Reserve cut interest rates on October 30 for the third time this year, but signaled a pause in the easing cycle that started in July when it reduced borrowing costs for the first time since 2008.
Slow job growth has mainly been attributed to the ongoing US-China trade war, which has thus far lasted 16 months and undermined business investment. Chair of the federal reserve Jerome Powell, hoping to blunt the impact and momentum of this slowdown, cut interest rates for the third time this year. Consistent consumer spending has also helped bolster the US economy.
Nancy Curtin, Chief Investment Officer at Close Brothers Asset Management, reacted to the news, saying, “While the global slowdown remains an issue, the US economy is looking less fragile than some had feared, but the Fed and the White House will be keeping a close eye on how employment rate evolves. With an impeachment enquiry dominating the airwaves, an under-performing economy is the biggest threat to Trump’s re-election chances.”
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