- Job growth in October slowed. The unemployment rate rose.
- New-vehicle sales in October edged despite lower fleet sales.
- UAW strikes lead Detroit 3 to reduce fleet sales.
Job growth in October slowed and was weaker than expected. Prior job numbers were revised down, and the unemployment rate increased to the highest level since the beginning of 2022 while wage inflation moderated slightly.
The labor market is showing the impact of the Fed’s efforts to slow the economy. Financial markets cheered the result as bond yields retreated from October highs and stocks moved higher last week.
New-vehicle sales edged higher in October, despite the impact of the UAW strikes and a decline in fleet sales. The retail sales pace increased even though incentives declined for the first time in a year.
Job Growth in October Slowed; Unemployment Rate Rose
Job growth in October slowed and was weaker than expected. Prior job numbers were revised down, suggesting that September’s reacceleration was a fluke.
October saw 150,000 jobs created when 180,000 had been expected. The prior two monthly numbers were revised down for a net decline of 101,000 fewer jobs than originally estimated. As a result, October’s job growth was half the size of September’s downwardly revised 297,000.
The three-month moving average, a reliable indicator of momentum, is now 204,000 new jobs, which is back close to the pace in June and July. The Fed’s efforts to slow the economy and, specifically, the strong labor market are again bearing fruit, as job creation is much lower now than a year ago.
The private sector only created 99,000 jobs in October. Manufacturing lost jobs as the UAW strikes were reflected in the data. Services produced 110,000 new jobs, but the month had losses in information, trade, transportation and utilities, and financial activities. Education and health care had the largest gain in the private sector, with 89,000 jobs created, which was an increase from 78,000 in September. Auto dealers added 5,900 jobs in October, which left employment at dealers down 39,600 or 3.0% below the February 2020 level. Total payrolls now exceed February 2020 payrolls by 4.6 million or 3.0%.
The headline unemployment rate increased to 3.9% from 3.8% in September, reaching the highest level of unemployment since January 2022. Growth in the labor force drove most of the higher rate, as has been the case this year. However, the labor force participation rate fell slightly to 62.7% in October from 62.8% in September, which had been the highest level since February 2020. Participation is down 0.6 percentage points from then and represents 1.6 million fewer people in the labor force compared to then despite having added 4.6 million jobs.
The underemployment rate, which is the broadest measure of unemployment, increased to 7.2% from 7.0% in September and is now higher than in February 2020. Monthly average hourly earnings growth slowed to 0.2% from an upwardly revised 0.3% in September. Earnings growth year-over-year also slowed to 4.1%, which was the lowest level of wage inflation since June 2021.
New-Vehicle Sales in October Edged Up Despite Lower Fleet Sales
Total new-light-vehicle sales were up 1.6% in October from a year ago, with one fewer selling day compared to October 2022. By volume, new-vehicle sales were down 10% from September. The October seasonally adjusted annual rate (SAAR), or sales pace, was 15.5 million, a 5.6% increase from last year’s 14.7 million but down 1.2% from September’s 15.7 million.
The sales pace faded at month’s end just as the UAW strikes were ending. The strikes had an impact on the month in several areas, including declining sales to fleets. Combined sales into large rental, commercial, and government fleets were down 10% from a year ago. Sales into large rental fleets were down 7%, while sales to commercial fleets were down 21%, but sales to government fleets were up 31%.
Including an estimate for fleet deliveries into dealer and manufacturer channels, the remaining retail sales were estimated to be up 3.3%, leading to an estimated retail SAAR of 13.4 million, which was up 0.9 million from last year’s pace and up 0.5 million from last month’s 12.9-million pace. The fleet share of 13.5%, compared with 15% a year ago and 13.8% in September.
The strikes also changed the expanding incentives trends we had seen earlier in the year. The average incentive spend from manufacturers declined 1.4% to $2,322, according to Motor Intelligence data. That was the first month with a decline in a year, but even so, incentives were up 118% year over year.
Jonathan Smoke leads Cox Automotive’s economic and industry insights team, which tracks key metrics and trends impacting both the wholesale and retail markets for vehicles informed by the proprietary data from the company’s businesses and platforms. For 28 years, Smoke has focused on translating data and trends into relevant actionable insights for the industries that represent the biggest purchases that consumers make in their lifetimes: real estate and automotive. Smoke joined Cox Automotive in 2017.