Economic Outlook for October 2024

Purchasing Managers Index (PMI):
The ISM Manufacturing PMI for October held steady at 47.2, matching the September figure. This marks a continuation of contraction in the manufacturing sector, with weak new orders and production levels persisting. However, job openings in the manufacturing space showed a slight recovery, rising to 8.04 million, reflecting some stabilization in demand for labor.

Unemployment Rate:
The unemployment rate in October edged lower to 4.1%, from 4.2% in September. This slight improvement coincides with stronger-than-expected non-farm job creation. However, weekly unemployment claims fluctuated, with the average nearing 241K, suggesting lingering uncertainties in the labor market.

Non-Farm Payroll:
October saw a notable rebound in job growth, with 254,000 jobs added, significantly outpacing September’s 142,000. Wage growth also improved, with average hourly earnings rising 0.4% month-over-month, up from September’s 0.3%. These gains reflect growing momentum in labor-intensive sectors, including services and retail.

Market Outlook:
The financial markets responded positively to October’s strong job numbers and improved consumer sentiment, with the CB Consumer Confidence Index climbing to 108.7 from 98.7 in September. Core inflation, as measured by the Core CPI, ticked up 0.3%, consistent with September, while the year-over-year CPI cooled slightly to 2.4%, signaling continued progress in curbing inflation.

With GDP growth in the third quarter confirmed at 3.0%, the economy shows resilience despite persistent manufacturing challenges. The Federal Reserve is expected to maintain its cautious stance, with markets not pricing in any significant monetary policy changes for the remainder of the year.

Conclusion:
October 2024 presents a mixed but cautiously optimistic economic outlook. The labor market rebounded, with strong job creation and wage growth, while the services sector remains a key driver of economic activity. Inflation remains contained, and consumer confidence has strengthened. However, ongoing manufacturing weakness and fluctuations in unemployment claims suggest that challenges remain. Overall, the economy appears to be stabilizing as it heads into the final months of the year.