US job growth probably slowed in October partly due to strikes by the United Auto Workers (UAW) union against Detroit’s “Big Three” car makers, which depressed manufacturing payrolls.
The UAW’s walkout lasted for two weeks as the union pushed for pay raises and demanded changes to how the automakers operate their factories. The UAW aimed to eliminate the tier wage system and restore cost-of-living adjustments to its members’ pay, end tiered hiring for new hires, bring back defined-benefit pensions, and reduce members’ weekly work hours. GM, Ford, and the auto parts supplier Stellantis all agreed to some of the union’s demands in the latest round of talks that wrapped up on Friday. GM’s deal included restoring production at its Belvidere, Illinois, Jeep factory and Trenton engine plant. The union also negotiated a deal with Ford to return the production of its Lincoln Aviator SUV in Lansing Delta Township. Ford also agreed to return production of its Mustang and F-150 pickup trucks at the Dearborn Assembly and Michigan Assembly plants, as well as its Lincoln Precision Casting facility.
But the UAW’s latest offer remained far short of what the company needs to cover rising healthcare costs, retirees’ benefits, and profit margins that are squeezed by higher raw materials and freight costs. The company said it needed to save about $3.6 billion in the first quarter to keep its profit forecast. The UAW’s president, Shawn Fain, spoke to members on Facebook Live and told them to stay ready for more walkouts.
Nonfarm payrolls rose 150,000 last month, the Labor Department’s Bureau of Labor Statistics reported on Friday. That was down from September’s revised estimate of 297,000 jobs created and below economists’ expectations for payroll growth of 180,000. The economy needs to create roughly 100,000 jobs a month to keep up with growth in the working-age population.
A moderation in employment growth last month would be payback after September’s enormous gains, the largest in eight months. But the underlying job market remains strong. With the UAW’s strike over, November’s payrolls will likely gain momentum, especially as state and local governments resume hiring for the upcoming school year.
A strong employment report would also make it less likely that the Federal Reserve will raise short-term interest rates, which have been held at their lowest level in nearly nine years. The Fed may have to wait until the fourth quarter before raising rates again. The economy’s strong performance in the first half of the year has helped the Fed resist pressure to raise rates. The central bank is already reducing its balance sheet, buying mortgage-backed securities to boost liquidity in the financial markets. The bond purchases will take place at a rate of about $10 billion per month. This is down from a monthly pace of more than $20 billion in the first quarter. The Fed has also reduced its purchases of long-term Treasuries to keep the yield curve in check.
