October job gains significantly cooled compared to September, falling back under the average monthly gain of 258,000 over the prior 12 months.
Total nonfarm payroll employment increased by 150,000 jobs in October, half of the number posted in September, according to data released by the Bureau of Labor Statistics. Meanwhile, the unemployment rate rose slightly to 3.9%, aligning with the Fed’s projection for 2023 of 3.8%. The number of unemployed persons also ticked up to 6.5 million. While wages kept rising, October posted the slowest pace of wage growth since June 2021, according to Bright MLS Chief Economist Lisa Sturtevant.
Job openings also kept steady in September at 9.6 million, falling somewhere between their March 2022 high (12 million) and their relative pre-pandemic November 2018 high (7.6 million).
Additionally, the Bureau of Labor Statistics revised down the change in total nonfarm payroll employment for September by 39,000, from +336,000 to +297,000. In August, it was revised down by 62,000, from +227,000 to +165,000. In other words, employment in August and September combined is 101,000 lower than previously reported.
In October, health care, government, and social assistance posted some strong job gains. Meanwhile, employment in manufacturing dropped, reflecting strike activity at companies such as UAW.
What to expect in the housing market ?
In October, construction employment continued to trend up, adding 23,000 more jobs, aligning with the average monthly gain of 18,000 over the prior 12 months. More specifically, jobs picked up in specialty trade contractors (+14,000) and construction of buildings (+6,000).
“The continuing strength of the construction labor market may be surprising, but it’s reflective of broader housing market dynamics today,” First American Economist Ksenia Potapov said in a statement. ”Builders are benefitting from a lack of re-sale inventory as existing homeowners remain rate-locked in.”
Affordability issues, elevated mortgage rates and high home prices are contributing to consumer anxiety, Sturtevant said in a statement. As a result, she expects home sales to fall off during the fourth quarter.
“But American consumers are resilient and will adjust to the new normal. The strong desire for homeownership endures and home sales activity likely will rebound strongly next year,” she said.
The job data sparked changes in the bond market, with the key benchmark 10-year Treasury yield dropping down to 4.55%.
“That means mortgage rates will be coming down. The 30-year fixed rate will stick in the 7% range for this year but looks to move down into the 6% range by the spring of next year,” NAR Chief Economist Lawrence Yun said.