Public Peek: Truflation US Inflation Update for October 2024

The following is a public peek at our exclusive monthly Truflation CPI update, available in full by subscription, here.

Labor market trends

The Labor Department announced the unemployment rate remained at 4.1%.  This suggests that while the labor market may not be as healthy as earlier in the year it is still fundamentally healthy.

The October JOLT report saw the addition of 12,000 jobs, a significant drop from the 223,000 jobs added in September.  This decline is largely attributed to the impacts of Hurricanes Helene and Milton as well as strikes at Boeing and other locations, which collectively reduced net job growth by tens of thousands.   Sectors such as healthcare and government were key contributors, adding 51,300 and 40,000 jobs month on month, respectively in October (seasonally adjusted).

Exhibit 1 - Employee difference by sector compared to a year ago (seasonally adjusted)

Source: Department of Labor, Non farm payroll employment, Establishment Survey Data

Despite the continued additions to the job market, although at a slower pace, there is a cautionary sign for future hiring as temporary help services placement dropped 49,000 jobs last month and has decreased 577,000 since its peak in March 2022.  This however is likely to only be a fraction of the total temporary employment. The election campaigns will also have a significant impact on the temporary job market in November, given that the election has now been concluded. 

Initial Jobless Claims unexpectedly fell last week in a sign that turnover in the labor market remains low, but there is some evidence that employers have simply paused most of their personnel decisions until they can get a grip on a couple of macro-economic factors, especially given the recent rate cuts and the anticipated rate cuts in the future.

We have certainly seen the impact of AI, as 40% of the S&P 500 in their quarterly earnings reported to have said they are leveraging AI to drive productivity and sales.  Those companies as an aggregate have experienced 12.5% gain vs those not talking about AI only seeing an 8.5% gain. Until we see AI deployed at scale, it is very likely we are going to see a continued pattern of job replacement and a tight labor market.

The above is a public peek at our exclusive monthly Truflation CPI update, available in full by subscription, here.

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