US Economy 'finally Showing Signs Of Cracks' With Lacklustre October Jobs Numbers

Total nonfarm payroll employment increased by 150,000 in October, below the forecasted 190,000, the Bureau of Labor Statistics revealed today (3 November).

The unemployment rate ticked up from 3.8% in September to 3.9%, up by 0.5 percentage points from its low point in April.

Bank of England meets expectations by holding rates at 5.25%

Seema Shah, chief global strategist at Principal Asset Management, said that the report suggested that the job market was finally slowing.

"While some may be concerned that the economy is slowing, markets will no doubt celebrate the fact that a weaker jobs market should close the chapter on a key element of discomfort that has plagued markets since liftoff in March last year," she explained.

Richard Carter, head of fixed interest research at Quilter Cheviot, said that the US economy was "finally showing signs that cracks are appearing in what has been a formidable façade".

While he still argued that the economy remained "incredibly robust and in a strong position, especially when compared to peers", he said further weakening of the labour market should be watched closely.

All eyes on the BoE as Federal Reserve holds rates at 22-year high

Daniel Casali, chief investment strategist at Evelyn Partners, said that the data was unlikely to change the Federal Reserve's plan to keep interest rates ‘higher for longer' to address inflation.

He noted that overall employment was still expanding by around 2% per annum, which "should provide support for consumption growth", while weekly initial job claims remain at historically low levels.

"Importantly, average hourly earnings from the payroll report are slowing and that should give the Fed some comfort that wage-driven inflation is coming under control," he added.

 

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