Job growth slowed in October as the economy settled into a new normal

• The unemployment rate increased to 3.9% in October.
• The labor market added 150,000 jobs in October after 297,000 jobs added in September.

The US economy added 150,000 jobs in October, based on nonfarm payroll employment growth from the Bureau of Labor Statistics or BLS.

That's less than September's revised job growth of 297,000. The previous estimate for September was 336,000 nonfarm payrolls added. August's growth was also revised from 227,000 to 165,000, per Friday's news release from BLS.

"Over a year ago, President Biden said that once we transitioned from what were then the extremely high monthly jobs numbers — it was like 500,000 at the time — to something closer to 150,000, it would be a sign that we were moving into the next phase of recovery," acting Secretary of Labor Julie Su told Insider. "And that's exactly what this number is. This report shows the resilience of that initial recovery at a sustainable rate."

October's increase was below the forecast of 180,000.

"On the surface it was a weak headline payroll number, but most economists and markets are willing to look past that 150,000 number," Aaron Terrazas, chief economist at Glassdoor, told Insider. "It was exactly in line with the expectations."

After two straight months of an unemployment rate at 3.8%, the unemployment rate rose slightly to 3.9%. That's just above the forecast of 3.8%.

Wage growth slowed. Average hourly earnings increased by 0.2% from September to October, following month-over-month increases of 0.3%. Average hourly earnings increased by 4.1% from October last year to October this year, following year-over-year increases of around 4.3% in recent months. These earnings stood at $34.00 in October.

The labor force participation rate was 62.7% in October, similar to the 62.8% seen previously. The employment-population ratio was 60.2%, just below the 60.4% seen during the past few months.

Compared to other major industries that saw a one-month employment decline in October, manufacturing saw the largest drop. Employment in this industry fell by 35,000. Employment in motor vehicles and parts saw a drop of around 33,000, which can partly be attributed to strike activity per the news release from BLS.

Some of the industries that saw job growth from September to October included healthcare, construction, and leisure and hospitality.

Nick Bunker, economic research director for North America at the Indeed Hiring Lab, told Insider after the release of the jobs report that the headline nonfarm payroll growth was "quite strong" and solid given the "current level of unemployment and the aging of the population."

"When you add back in the workers who were on strike and the effects there, that's still very robust job gains," Bunker said.

Bunker added that things are "still settling down a little bit" like wage growth for instance.

"The household survey did have some troubling signs," Bunker said, noting the uptick in the unemployment rate "which is the highest we've seen since the beginning of 2022."

"Maybe some of that is strike effect with some workers who might've been on temporary layoff, but it's hard to tell," Bunker said.

Job openings data released earlier this week by BLS showed there were 9.6 million job openings in September, about the same as August. There were also about 3.7 million quits in September and August.

Bunker said in commentary about the Job Openings and Labor Turnover Survey report earlier this week that while it was "a bit boring," it was boring "in the best possible way."

Bunker noted elevated job openings, "both quitting and hiring have plateaued at healthy levels similar to what we saw before the pandemic," and the low layoff rate, which was 1.0% in September.

"The labor market has cooled off from its 2021 highs, but demand for workers is no longer dropping off," Bunker said. "But with labor supply still growing, this continued high level of demand won't necessarily push up inflation and draw the Federal Reserve's ire."

The Fed decided this week to hold rates steady with a pause in interest rate hikes. Fed Chair Jerome Powell noted in a press conference on Wednesday that economic data is showing resilience in the economy.

"I think it is still a story of how strong the jobs market has held up, despite all of these headwinds," Terrazas said. "I don't think it's going to ease any fears that this is just going to mean more upward pressure on interest rates."

Consumer Price Index data showed inflation was up 3.7% in September from a year ago, the same percent increase as in August. Gross domestic product also rose at an annualized rate of 4.9% in the third quarter, based on the advance estimate released by the Bureau of Economic Analysis. That's the fastest pace in around two years. And employers are still looking to hire people — with 5.9 million hires in September.

"We are attentive to recent data showing the resilience of economic growth and demand for labor," Powell said. "Evidence of growth persistently above potential, or that tightness in the labor market is no longer easing, could put further progress on inflation at risk and could warrant further tightening of monetary policy."

"The labor market remains tight, but supply and demand conditions continue to come into better balance," Powell said.

Nonfarm payroll employment is one important economic indicator of whether there's a recession. Some consumers, investors, and others are worried a recession might happen. The Conference Board believes that a recession will occur next year.

"Consumer fears of an impending recession remain elevated, consistent with the short and shallow economic contraction we anticipate for the first half of 2024," stated a press release from The Conference Board.