The U.S. unemployment rate may usher in a period of accelerated upward growth – Wall Street Insights

The number of new non-farm jobs in the United States in October was lower than expected. Education and health services, government departments, and the construction industry were the main contributors to new employment. The strike in the automobile industry has led to a significant decline in manufacturing employment, and the recent slowdown in the return of manufacturing may also reduce future job growth in the manufacturing and construction industries. The U.S. job market continues to cool, with many industries currently showing signs of weakness, and the U.S. unemployment rate may usher in a period of accelerated upward growth. Recently, U.S. economic data has weakened again. We predict that there is a high probability that the Federal Reserve will not raise interest rates in December. The first interest rate cut may be around the middle of next year. In the short term, it is expected that the U.S. dollar index and U.S. bond interest rates will remain high, weak and volatile.

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The number of new non-farm jobs in the United States in October 2023 was 150,000 (expected 180,000, previous value 297,000); the unemployment rate was 3.9% (expected 3.8%, previous value 3.8%); wages increased by 4.1% year-on-year and 0.2% month-on-month. (The previous values ​​were 4.3% and 0.3% respectively); the labor participation rate was 62.7% (expected 62.8%, the previous value was 62.8%).

The number of new non-farm jobs in the United States in October was lower than expected. Education and health services, government departments, and the construction industry were the main contributors to new employment.

The number of new non-farm jobs in the United States in October was 150,000, lower than market expectations of 180,000, and significantly lower than the downwardly revised previous value of 297,000. Salary growth increased by 4.1% year-on-year, slightly lower than the previous value of 4.3%; month-on-month growth increased by 0.2%, a decrease from the previous value of 0.3%, and month-on-month wage growth was slightly lower than market expectations. The unemployment rate was 3.9%, higher than market expectations and the previous value of 3.8%, reaching a nearly 21-month high. In terms of industries, 51,000 new jobs were created in government departments, and the number of employed people has returned to pre-epidemic levels. In the goods production category, the construction industry added 23,000 people, contributing to the main increase in the number of people in the goods production category. Education and health services added 89,000 people, and leisure and hotel industries added 19,000 people. They are the main contributors to the number of new people in service production. In addition, the labor force participation rate fell to 62.7% in October, lower than expected and the previous value of 62.8%

The strike in the automobile industry has led to a significant decline in manufacturing employment, and the recent slowdown in the return of manufacturing may also reduce future job growth in the manufacturing and construction industries.

First, manufacturing employment fell by 35,000 in October, of which 33,000 came from a decline in employment in the automotive industry due to strikes. Secondly, since the beginning of this year, driven by the return of U.S. manufacturing, employment in the U.S. construction industry has grown rapidly. However, judging from the recent situation of manufacturing construction spending, the monthly frequency data of manufacturing construction spending has been weak in the past few months. This may reflect the short-term “Bidenomics” industrial policy together with the equipment investment demand that turned negative in the third quarter. The fading of significant motivational effects. Under the influence of the recent slowdown in the return of manufacturing, job growth in the U.S. construction and manufacturing industries may also weaken in the future.

The U.S. job market continues to cool, with many industries currently showing signs of weakness, and the U.S. unemployment rate may usher in a period of accelerated upward growth.

First of all, judging from the non-agricultural sub-sector data in October, the manufacturing, transportation and warehousing industry, information industry, financial activities, and other service industries all experienced negative growth in non-agricultural employment, while the leisure and hotel industries that previously absorbed a large number of new jobs only 19,000 new jobs were created. Secondly, the number of new non-agricultural jobs in August and September was revised sharply downward again. August was revised down by 62,000, and September was revised down by 39,000. The total number was revised down by 101,000, once again showing that the job market is not like the previous market. As strong as expected, the current trend of the US job market is still consistent with our previous judgment that when the job market cools down, the Beveridge Curve will shift inward. The U.S. unemployment rate rose again in October, and the job vacancy rate is expected to gradually approach the trend center level in the future. The cooling of the job market will be more reflected in the increase in new unemployment. We believe that the unemployment rate may accelerate in the next few months.

Recently, U.S. economic data has weakened again. We predict that there is a high probability that the Federal Reserve will not raise interest rates in December. The first interest rate cut may be around the middle of next year. In the short term, it is expected that the U.S. dollar index and U.S. bond interest rates will remain high, weak and volatile.

The recent ISM manufacturing and non-manufacturing PMIs have both fallen short of expectations. At the same time, we predict that the U.S. CPI growth rate in October will be 3.3% year-on-year, which will continue to decline from the previous value of 3.7%. We predict that the core CPI growth rate in October will be 4.1% year-on-year, which will be the same as the previous value. Inflation has not rebounded, so we maintain our judgment that there is a high probability that the Federal Reserve will not raise interest rates in December, and the first interest rate cut may be around the middle of next year. As for asset prices, with non-agricultural data, ISM manufacturing and non-manufacturing PMI all falling short of expectations, the U.S. dollar index is expected to fluctuate weakly around 105-106, and the 10-year U.S. bond interest rate may be around 4.5 There is a weak shock near %.

Author: Cui Rong, Li Chong, source: CITIC Securities Research, original title: “Overseas Macro | The U.S. unemployment rate may usher in a period of accelerated upward growth”

Cui Rong’s practice certificate number: S1010517040001

Li Chong’s practicing certificate number: S1010522100001

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