Gauge of future hiring holds steady despite weak October payroll growth

Dive Brief:

A measurement of future hiring held steady in October despite weak job growth, indicating that the labor market may stabilize after cooling in recent months, the Conference Board said, citing its Employment Trends Index.
“Although October’s jobs report provided mixed results due to hurricane and strike impacts, several labor market indicators within the ETI improved,” Mitchell Barnes, a Conference Board economist, said in a statement.
“The labor market continues to cool from its rapid post-pandemic pace, but the ETI suggests that this trend may be leveling out,” Barnes said. “This comes at a time when we expect business uncertainty to begin lifting, as the Federal Reserve’s rate cuts start taking hold and uncertainty around the U.S. election subsides.”

Dive Insight:

U.S. employers expanded payrolls by just 12,000 last month, far less than expected and just a fraction of the 223,000 added in September, the Labor Department said Friday.

Employers were not solely responsible for the disappointing data. Some 33,000 Boeing workers began a strike in September and two hurricanes slammed the Southeast U.S. last month and in late September, casting thousands of people out of work.

The labor market setback is likely temporary, the Conference Board said, just hours before Boeing workers on Monday backed a four-year contract proposed by the company. They agreed to return to work on Wednesday.

“We expect some of October’s data blips to reverse in subsequent months, and generally see an economy growing at a healthy pace heading into 2025 as inflation and wage pressures continue to moderate,” Barnes said.

Indeed, the unemployment rate in October was unchanged at 4.1%, the Labor Department said. Also, in a positive sign for consumer spending, average hourly earnings rose 4% on an annual basis last month compared with 3.9% in September.

“We expect October’s labor market disruptions to be temporary in nature and unlikely to materially affect the ongoing dynamism of the U.S. real economy, which has grown over 11% since Q4 2019 and far outpaced the post-pandemic recovery of its G7 peers,” Moody’s Ratings said Monday.

The data on job growth is the last major indicator of economic health that the Fed will review as it considers changing monetary policy during a two-day meeting beginning Wednesday.

Traders in interest rate futures see 99% odds that policymakers will announce a quarter-point cut to the federal funds on Thursday, according to the CME FedWatch Tool. They set 75% odds of a similar reduction after a two-day meeting on Dec. 18.

The central bank currently holds the benchmark interest rate at a range from 4.75% to 5%.

Five of the eight components in the ETI improved in October, the Conference Board said.

The share of involuntary part-time workers fell last month, while the proportion of survey respondents who reported jobs as “hard to get” declined more than any month since January, the Conference Board said.

U.S. employers added 421,000 jobs in Q3 compared with 577,000 in Q2, Moody’s said, adding “we expect moderation to continue as labor-satiated firms pull back on hiring.”