Job creation slowed in October to its lowest level since late 2020 as the impact of storms in the Southeast and a severe labor gridlock weakened the job outlook.
Nonfarm payrolls rose by 12,000 this month, down sharply from September and below the Dow Jones estimate of 100,000. Bureau of Labor Statistics reported on Friday. The gain in October was the smallest since December 2020, in what was expected to be a downbeat report.
However, the unemployment rate remained at 4.1%, in line with expectations. The broader unemployment rate measure, which includes discouraged workers and those working part-time for economic reasons, also remained unchanged at 7.7%.
In its report narrative, the Bureau of Labor Statistics states Boeing strike Manufacturing could lose 44,000 jobs, for a total loss of 46,000 jobs.
Among other things, the report noted the impact of hurricanes Helen and Milton, but said it was “impossible to quantify the net impact of the storms on total employment.” The Bureau of Labor Statistics noted that business surveys showing overall nonfarm employment growth were “well below average” and in fact the lowest in more than 30 years, but said this was true in areas affected by the pandemic. storms as well as storms outside the area.
In addition, the bureau said average hourly earnings increased 0.4% this month, slightly higher than expected, but the 12-month increase of 4% was in line with expectations. The average working week has remained stable at 34.3 hours.
However, the market has largely ignored the bad news; stock market futures Stocks opened higher on Wall Street, while Treasury yields plunged. The meager jobs data and wages in line with expectations helped solidify momentum for the Federal Reserve to cut interest rates again next week.
“At first glance, the October jobs report paints a picture of an increasingly fragile U.S. labor market, but beneath the surface is a report roiled by climate and workforce disruptions,” said Cory Stahle, economist at Indeed Hiring Labs “While the impact of these events is real and should not be ignored, they are likely to be temporary and not a sign of a job market collapse.”
This release comes just days before release presidential election of which the Democratic Party Kamala Harris and republican party Donald Trump Most polls show this is a deadlocked race. Lisa Sturtevant, chief economist at Bright MLS, said the thin jobs data “casts a dark shadow over next week” as the economy is at the forefront of the battle.
The weak October report also included sharp downward revisions from previous months. August’s increase was revised down to just 78,000, while the initial estimate for September was revised down to 223,000. The net revision total reduced the previously reported job creation total by 112,000.
The health care and government sectors once again led job creation, adding 52,000 and 40,000 positions respectively. However, job losses occurred in several industries.
In addition to the expected manufacturing contraction, temporary help services workers also fell by 49,000. The U.S. Bureau of Labor Statistics said this category, sometimes considered a proxy for underlying work intensity, has declined by 577,000 workers since March 2022.
Leisure and hospitality, another leading industry, fell by 4,000, while retail trade, transport and warehousing also saw small declines.
Hiring was even weaker in the household survey used to calculate the unemployment rate.
This shows that there are 368,000 fewer people in work and 220,000 fewer people are in the labor force. Full-time employment fell by 164,000, and part-time employment fell by 227,000.
The report covers a month in which Hurricanes Helen and Milton battered the Southeast, particularly Florida and North Carolina, while a Boeing strike also hit an otherwise vibrant but slowing labor market. Recent developments suggest the Boeing standoff may be coming to an end.
Ahead of the release, monthly job creation was expected to average nearly 200,000 in 2024, about 60,000 fewer than a year earlier but still signaling a solid pace of hiring.
Some cracks in recent months have raised concerns from the Fed that even though year-over-year inflation is slowing, rising interest rates could impact the labor market and threaten the ongoing economic expansion.
As a result, policymakers took an unprecedented step in September to target economic growth, cutting the benchmark short-term interest rate by half a percentage point, twice the regular 25 basis point increment the Fed usually prefers.
Financial markets see a strong possibility of a quarter-percentage point rate cut at each of the central bank’s remaining two meetings this year. The Federal Open Market Committee, which sets interest rates, will announce its decision next Thursday.
