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US payrolls weaker than expected, with pay rises moderating

The latest US labour data suggests that the jobs market could be cooling. Despite the Fed’s recent ‘higher-for-longer’ rhetoric, this softer jobs data will raise speculation over the timing of future rate cuts.

3 November 2023

US non-farm payrolls came in slightly below forecast at 150k (against expectations of a 180k advance), although the auto sector strikes took out 33k so. With those added back in, the monthly number was more in line. With revisions down on previous months, a rise in the overall unemployment rate to 3.9% - the highest since January 2022 - and average hourly earnings slipping to a 0.2% advance, collectively these are perhaps tentative signs of a softening labour market. So they will give cheer to risk assets as bets on rate cuts will rise from here, even if the Federal Reserve (Fed) are committed to tight policy for a while. The landing approach that the Fed is piloting the economy on looks on the face of it to be a soft one for now.

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Charles Hepworth

Investment Director
My Insights

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