By Ann Saphir
Federal Reserve policymakers look all but certain to reduce short-term borrowing costs by a modest quarter of a percentage point at their policy meeting next week, their confidence that the labor market is cooling but not crashing likely intact despite new data showing US employers added fewer workers in October than in any month since December 2020.
The increase of 12,000 nonfarm payroll jobs last month was far short of the 113,000 economists had anticipated. But analysts pinned the bulk of the weak showing on the tens of thousands of workers kept temporarily off the job by a Boeing strike and the impact of two large hurricanes in the US Southeast, as well as a poor response rate that clouds the true state of US employment.
Some 512,000 people reported they were unable to work due to bad weather, the most for the month of October since the Bureau of Labor Statistics began tracking that figure in 1976.
The unemployment rate remained at 4.1 percent, low by historical standards.
But the report had weak spots. It showed that it may be getting harder to find a job once a person is out of work, with the average length of unemployment rising to 22.9 weeks, from 20.6 weeks in September. The labor force also shrank by 220,000 people, and the three-month average monthly job gain after downward revisions to prior months’ reports is now about 104,000, well below what most economists estimate is needed to keep up with immigration-fueled population growth.
“Bad weather and large labor strikes muddy the water and make labor market weakness appear worse than it truly is,” Scott Anderson, chief US economist at BMO Capital Markets, wrote in a note. “Still, the Fed’s job is to see through the noise, and they will probably take some signal from the continuing labor market softening as a sign that they can continue the process of monetary normalization without much fear of igniting another bout of inflation.”
Data earlier this week showed inflation by the Fed’s targeted measure running at 2.1 percent in September, just a notch above its 2 percent goal, though sticky underlying price pressures are expected to keep US central bankers wary of declaring victory too early. – Reuters
