The last week of September 2023 was marked by two major events that could have significant implications for the US economy and the labor market: the release of the September jobs report and the strike of the United Auto Workers (UAW) union against the Big 3 automakers.
September jobs report: A mixed bag
On Friday, the Bureau of Labor Statistics (BLS) reported that the US economy added 194,000 jobs in September, below the consensus estimate of 220,000. The unemployment rate fell to 4.8%, the lowest since March 2020, but the labor force participation rate also declined to 61.6%, indicating that some workers dropped out of the labor market.
The report showed that the recovery from the pandemic-induced recession is still uneven and facing headwinds from the Delta variant, supply chain disruptions, and labor shortages. Some sectors, such as leisure and hospitality, education, and health care, added jobs, while others, such as retail, manufacturing, and government, lost jobs.
The report also revealed some positive signs, such as an increase in average hourly earnings by 0.6% and an upward revision of the job gains in July and August by a combined 169,000. The BLS also noted that the number of long-term unemployed (those jobless for 27 weeks or more) decreased by 246,000, while the number of involuntary part-time workers (those who would prefer full-time work but could not find it) fell by 187,000.
UAW strike: A historic showdown
On Monday, about 150,000 members of the UAW union went on strike against General Motors, Ford, and Stellantis, the parent company of Chrysler, Jeep, and Dodge. The strike, which is the first nationwide walkout by the UAW since 1976, is aimed at securing better wages, benefits, and job security for the workers amid the transition to electric vehicles and the threat of outsourcing.
The strike has already disrupted the production and sales of the Big 3, which are already struggling with the global chip shortage and the rising costs of raw materials. According to some estimates, the strike could cost the automakers up to $1 billion per week in lost revenue and profits. The strike could also have ripple effects on the suppliers, dealers, and consumers of the auto industry, as well as the broader economy.
The negotiations between the UAW and the automakers are ongoing, but the issues are complex and contentious. The UAW is demanding higher wages, more profit-sharing, better health care, and a larger share of the electric vehicle market. The automakers are offering some concessions, such as signing bonuses, wage increases, and investments in US plants, but they are also seeking more flexibility, cost-cutting, and productivity gains.
The strike could last for weeks or even months, depending on the progress and the willingness of both sides to compromise. The outcome of the strike could have lasting implications for the future of the US auto industry and the labor movement.
What to watch for next week?
The first week of October 2023 will bring more economic data and events that could influence the markets and the policy decisions. Some of the highlights include:
- The ISM manufacturing and services indexes, which measure the activity and sentiment of the US factory and service sectors, respectively. The indexes are expected to show a slight improvement in September, but still remain below the pre-pandemic levels.
- The trade balance report, which shows the difference between the US exports and imports of goods and services. The report is expected to show a widening of the trade deficit in August, as the US demand for foreign goods outpaced the supply of domestic goods.
- The Federal Reserve minutes, which provide a detailed account of the discussions and decisions of the Fed’s policy-making committee at its last meeting in September. The minutes could offer more clues on the Fed’s plans to taper its bond-buying program and raise its interest rates in the coming months.
- The consumer credit report, which shows the change in the outstanding debt of the US consumers, excluding mortgages. The report is expected to show a modest increase in consumer borrowing in August, as the demand for credit cards and auto loans picked up.