The U.S. labor market showed signs of stabilization after two consecutive months of decline, though overall demand continues to slow, and wage growth remains stagnant, adding uncertainty to whether the Federal Reserve will cut rates again in December.
Automatic Data Processing Inc (ADP) reported on Wednesday that U.S. private payrolls rose by 42,000 in October, significantly surpassing the expected 30,000 and reversing the revised decline of 29,000 (previously 32,000) in September.
ADP Chief Economist Nela Richardson noted that hiring in October was relatively moderate compared to earlier reports this year. Wage growth has remained largely flat for over a year, indicating a balanced labor supply-demand dynamic.
However, high-profile layoffs announced by major companies such as Amazon, Starbucks, and Target have heightened concerns about the job market outlook. While initial jobless claims remain low, risks of rising layoffs could push unemployment higher in coming months.
Following the data release, the U.S. dollar index edged up slightly to 100.19. U.S. stock futures showed little movement, with Nasdaq 100 futures down about 0.1%. The 10-year Treasury yield rose to 4.084%, while spot gold dipped by $5 to $3,964.83 per ounce.
**Moderate Job Growth Reflects Cooling Demand, Big Firms’ Layoffs Fuel Anxiety**
The October job gain of 42,000, though positive, marks a slowdown compared to earlier this year, aligning with broader labor market weakness as employers turn cautious.
The service sector added 32,000 jobs, while goods-producing industries contributed 9,000.
Wage growth has remained stagnant for over a year, signaling a rebalancing in labor supply and demand, easing post-pandemic tightness.
Recent layoff announcements from Amazon, Starbucks, and Target have raised concerns, even as initial jobless claims stay low. Analysts warn that the current low-layoff environment could shift, potentially driving unemployment higher in the months ahead.
**Fed Policy Path in Question**
After the Fed’s second consecutive rate cut last week, Chair Jerome Powell noted the labor market is cooling "very gradually, but that’s about it." He emphasized uncertainty over whether another cut will come in December.
October’s tepid jobs report offers mixed signals for policymakers—stabilization eases fears of rapid deterioration, but slowing demand and flat wages require careful assessment in upcoming meetings.
Updates in progress...