Economic Summary: Week of October 21 to 27
1. Wages Grow at a Slower Pace in the US.
During the last week of October, salary data indicated that the growth of income per hour worked began to slow down, with a year-on-year increase of 4.2%, compared to 4.5% recorded in September. This decrease, although small, could be an indication that inflationary pressures are giving way in the labor market.
Employers seem to be moderating their wage increases in response to a more uncertain economic environment and higher financing costs. However, the slowdown could also give a break to the Federal Reserve, which seeks to cool the economy without causing a significant increase in unemployment.
Sectors such as technology, manufacturing and retail have shown the least variation in wages, while industries such as health care and hospitality continue to offer competitive increases due to the high demand for talent.
2. The Rise of Temporary Work and Contracts by Projects
With companies looking for ways to reduce costs without resorting to mass layoffs, temporary work and project hiring are on the rise. According to a recent report, the number of workers hired under temporary schemes rose 12% in October, the highest level in two years.
The flexibility that this type of employment offers companies allows them to adjust to fluctuating demand without committing to long-term contracts. However, for workers, this trend brings uncertainty and fewer labor benefits, which could affect their long-term financial stability.
The sectors leading this trend include e-commerce, transport and logistics, all of them facing high demand seasons before the holidays.
3. Inflation is once again the center of attention
The preliminary consumer price index (CPI) for October indicated a monthly increase of 0.3%, a slightly higher than expected figure. Although annualized inflation remains at 3.6%, this upturn worries analysts who fear that the cost of essential goods will rise again during the winter.
The main driver of this increase was energy prices, which rose by 5% due to supply interruptions and uncertainty in the Middle East. On the other hand, food prices remained stable, which brought partial relief to consumers.
Despite these figures, the Federal Reserve continues to suggest that it could pause the rate hikes at its next meeting, depending on how the economic data evolve in November. Analysts expect monetary policy measures to begin to have a clearer impact on prices during the first quarter of 2025.
4. Business Confidence Shows Mixed Signals
A new report from the United States Chamber of Commerce revealed that business confidence is divided. While large companies maintain a relatively positive outlook for 2024, small and medium-sized enterprises (SMEs) reported a higher level of concern due to the increase in financing costs and the decrease in consumer demand.
Sectors related to technology and financial services showed the greatest optimism, while industries such as manufacturing, construction and real estate face greater challenges. Many entrepreneurs are turning to technological innovations and automation to maintain efficiency in a more demanding economic environment.
5. Mortgage Rates and the Housing Market
The real estate market remains under pressure due to the continuous increase in mortgage rates, which averaged 8% for 30-year loans, the highest level since 2000. This increase has significantly reduced market activity, with sales of existing homes falling by 20% compared to the previous year.
However, the construction of multi-family homes continues to grow, as developers seek to capitalize on the high demand for rentals. Home prices, although more stable, remain inaccessible to many first-time buyers, which has led to a shift towards renting as a more viable option.
6. Key Trends to Follow in November
As we approach the end of the year, analysts highlight three key trends to follow:
Adjustments in the labor market: The change to temporary jobs and the wage slowdown could affect consumption habits in the holiday season.
Global impact on markets: Geopolitical uncertainty in the Middle East and changes in global monetary policies continue to be important risks.
The evolution of consumption: Despite inflationary pressures, spending on experiences, such as travel and entertainment, remains strong, but could be affected if consumer confidence continues to fall.
Final Reflection
The economic landscape remains at a critical stage of adjustments, with mixed signals that require attention for both investors and workers. At Mundo Wall Street, we will continue to break down the most relevant news to help you make informed decisions and keep up with market changes.
