Synopsis:

CIBC's analysis of the U.S. Non-Farm Payrolls for October points to a deceleration in job growth and a marginal increase in the unemployment rate, influenced partly by the UAW strike. The numbers came in below expectations, with revisions to previous months suggesting a cooler labor market than previously understood.

Key Points:

• Job Growth Slows: The NFP showed an increase of 150K jobs, a significant drop from the previous month's 297K, hinting at a slowdown in labor market expansion.

• Strike Affects Numbers: The UAW strike resulted in a 33K reduction in employment within the motor vehicle and parts sector, a temporary factor expected to rebound in subsequent reports.

• Unemployment Rate Rises: Contrary to steady rate forecasts, unemployment ticked up to 3.9%, not due to an increase in labor supply but potentially reflecting a dip in employment growth.

• Participation Rate Declines: The labor force participation rate decreased to 62.7%, signaling a possible stall in labor supply.

• Wage Growth Subdued: Nominal wage growth remained relatively modest, registering a 0.2% month-over-month increase in October, although September's growth was revised upward slightly.

Conclusion:

The October labor market report suggests a cooling off from the hot job growth earlier in the year, with the UAW strike providing a clear but temporary influence on the figures. Even discounting the strike's impact, underlying data implies that both labor demand and supply may be softening. This development could have implications for future economic policy, as it indicates a labor market that is potentially less tight than recent data had suggested.