impact in considering the strength of economic activity. all in all, it seems like output growth is moderating as i had hoped it would, supporting continued progress on inflation. the labor market is also cooling off. job creation is down this year from the high rates of 2022, and the unemployment rate has risen from a more than 50 - year low of 3. 4 percent in april to 3. 9 percent in october. the ratio of job vacancies to people seeking work has fallen, and so has the rate of people voluntarily quitting their jobs. average hourly earnings, which grew at an annual rate of more than 5 percent last year, have decelerated more or less steadily in 2023 to 4. 1 percent in october. these are all signs of a loosening labor market. but for all of the measures i have mentioned, they are still at levels that, historically, would be associated with a fairly tight labor market. we have 10 months of data on job creation in 2023, and for the 5 months through may, the monthly average was 287, 000. even with the strong month in september, the average for the past five months has been 190, 000, which is close to the 10 - year average from 2010 through 2019. 3 that's a significant slowing, but job creation is still happening at a rate that is higher than what would be required to absorb new entrants to the labor force, factoring out changes in labor force participation. and while 3. 9 percent unemployment is higher than the april low, it is still basically as low as unemployment got during the booming job market of the late 1990s. members of the national federation of independent businesses ( nfib ) report job vacancies are down significantly from 2022, but still at a level that is higher than the late 1990s or any time in the 36 years of the nfib survey. 4 the bottom line here is that the labor market is still 2 / 5 bis - central bankers'speeches fairly tight and i will be watching closely to see whether it continues to moderate in ways that keeps inflation moving toward 2 percent. so, let's talk about that progress on inflation. consumer price index ( cpi ) inflation for october was what i want to see. for the month, there was no inflation, prices were virtually flat, and unlike earlier moments where improvements were concentrated in some goods and services, the moderation in inflation was broadly distributed. over the previous 12 months, cpi

the first half of 2023, when real gdp grew at a little more than a 2 percent pace. growth in consumer spending, which accounts for most of gdp, was strong in the third quarter. data on economic activity in october indicate that consumer spending is cooling from its pace in the third quarter. retail sales fell 0. 1 percent, the first drop since march. spending was down on motor vehicles, an interest - sensitive sector, which may be evidence that that the fomc's tightening of monetary policy is having some effect. spending was also down at gasoline stations, mostly because of a sizable decline in gas prices, often a larger factor for this segment of retail than shifts in demand. but 1 / 5 bis - central bankers'speeches even without motor vehicles and sales at gas stations, retail sales barely increased in october, which may reflect a broad - based moderation in demand. beyond consumer spending, there are indications that manufacturing and nonmanufacturing activity by businesses slowed in october. if we factor out a big drop in motor vehicle and parts production due to the united auto workers strike which ended october 30, manufacturing output edged up only 0. 1 percent last month. 2 surveys of purchasing managers by the institute for supply management indicated that both manufacturing and non - manufacturing activity slowed in october. nowcasting models that forecast gdp based on available data are predicting a significant moderation in economic activity in the fourth quarter. after the retail sales report for october, the atlanta fed's gdpnow model is forecasting a 2. 1 percent pace of increase for these three months, nearly identical with the actual growth rate for the first half of the year. something that significantly boosted gdp in the third quarter was a buildup in inventories, which are quite volatile from quarter to quarter. this volatility reflects how businesses manage their inventories by building them up and drawing them down at other times to manage cash flow and anticipate swings in demand. private inventory investment contributed 1. 3 percentage points to gdp in the third quarter and that likely won't be sustained. inventory swings could even subtract from gdp in future quarters. one thing to bear in mind is that the gdpnow estimate does not include the effects of the auto workers strike. a range of estimates suggest the strike will cut roughly half of a percentage point off the gdp growth rate in the fourth quarter and then boost gdp in the next quarter around the same amount, so i will tend to look through the strike