The unemployment rate increased in October as the American economy produced fewer jobs than anticipated. In addition, the number of jobs created also is a potential signal of a looming recession, which economists have feared for more than a year.
The American economy added 150,000 new jobs in October, which was significantly lower than the 179,000 expected. Furthermore, the last several months’ employment reports were revised downward. The September amount was reduced by almost 40,000 jobs, while August’s declined from the initial 227,000 to 165,000.
Furthermore, the unemployment rate increased in the recent report, despite expectations. Economists estimated that the new report would have a 3.8% unemployment rate. Instead, the gauge increased to 3.9%.
JUST IN: The U.S. added 150,000 jobs last month, dropping from a revised 297,000 in September as the red-hot U.S. labor market cooled.
The unemployment rate rose to 3.9%, from 3.8% in September. https://t.co/AgrfFgeMgn
— Axios (@axios) November 3, 2023
Furthermore, the details of the recent jobs report could also signal issues in the overall growth of the economy. The recent estimate by payroll processor ADP showed an estimated 113,000 new private sector jobs. Instead, the official Department of Labor figures showed that only 99,000 of the jobs created in October were in the private sector.
The October employment report could provide a difficult path for President Joe Biden in his reelection campaign. Recent inflation figures came in hotter than expected, signaling that the Federal Reserve may need to continue raising rates.
The increase of 0.4% monthly inflation and 3.7% annual inflation in September was a worrying sign that the high inflation of the last three years may not be over. Both figures were higher than expected.
Even without food and energy prices, the annual consumer price index (CPI) rose 4.1% on an annual basis in September.
The increase in inflation may force the Federal Reserve to raise rates later this year. The Fed recently announced that it would not raise rates currently, but reserved the ability to do so in the near future.
Such an increase would make it more difficult to borrow money and could further slow the American economy, further dragging down job growth.