A recruitment sign outside a Stewart gas station in Catskills, New York, U.S., Wednesday, October 2, 2024.
Angus Mordants | Bloomberg | Getty Images
Powerful hurricanes and massive labor strikes are likely to wipe out a large portion of nonfarm payrolls in October, which is expected to be the slowest month for job creation in nearly four years.
Economists surveyed by Dow Jones expect the U.S. Bureau of Labor Statistics to report on Friday that employment rose by just 100,000 people this month, with the following factors holding back: Hurricanes Helen and Milton and the Boeing strike. If their predictions are accurate, this would be the lowest employment total since December 2020 and a significant drop from expectations September 254,000.
The report will be released at 8:30 a.m. ET, with the unemployment rate expected to remain unchanged at 4.1%.
“When we look at this (key employment data), the unemployment rate will remain low and I think wages will grow faster than inflation, both of which will highlight the health of the U.S. economy,” said chief economist Michael Michael Arone said. Investment Strategist at State Street Global Advisors.
In terms of wages, average hourly earnings are expected to increase by 0.3% this month, up 4% from the same period last year, and the annual data will be unchanged from September, further supporting the view that inflation is sticky but not accelerating.
Regardless of the outcome, the market may choose to read the report carefully since so many one-time hits dampen hiring.
“The top-line numbers may be a little noisy, but I think they’re enough to continue to establish that the soft landing is intact and that the U.S. economy is still in good shape,” Aron added.
Monetary losses from hurricanes could reach historic levels, and Boeing strike 33,000 workers have lost their jobs.
Goldman Sachs estimates that Helene reduced employment by 50,000 jobs, although Hurricane Milton may have occurred too late to affect employment in October. Goldman Sachs added that the strike at Boeing, meanwhile, could lead to a loss of 41,000 jobs in total employment, which is expected to rise by 95,000.
The data is already solid
However, the closely watched jobs report showed that hiring continued apace and layoffs were low despite the damage from the storms and strikes.
payroll processing company ADP Report of the Week Private businesses hired 233,000 new workers in October, well above expectations, while initial jobless claims fell to 216,000, the lowest level since late April.
Still, the White House estimates that these events could collectively reduce employment by as many as 100,000 people. “These disruptions will make this month’s jobs report harder to read than usual,” Council of Economic Advisers Chairman Jared Bernstein said Wednesday.
Employment data has generally been noisy in the post-COVID world.
Earlier this year, the U.S. Bureau of Labor Statistics announced benchmark revisions 818,000 fewer people than the previous count For the 12-month period ending March 2024. Year-to-date through July, the revised figure represents a net decrease of 310,000 from the initial estimate.
“This report will reinforce the big picture that the labor market is still growing. But the fact is, it’s growing, but it’s slowing,” said Julia Pollak, chief economist at ZipRecruiter. “Growth is slowing. , and also become more concentrated in a few industries.”
The main areas of job creation this year are government, healthcare, leisure and hospitality. Pollak said that’s still the case, especially in health care, while ZipRecruiter is also seeing greater interest in the technology sector and related businesses like finance and insurance.
Still, she said the overall picture is that the market is slowing and will need help from the Federal Reserve’s interest rate cuts to stem the slide.
“Job growth has been below pre-pandemic averages over the past two quarters, and job growth has been unusually narrowly distributed,” Pollack said. “This has had a real impact on job seekers and workers who feel they have leverage. Weakened, many of them are struggling to find acceptable jobs. So I do think the Fed’s focus should be firmly on the labor market.”
